Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Home Improvement (Payments)

Mr. Rowlands: asked the Secretary of State for Wales how many local authorities have frozen payments on home improvement: and how many grant applications are at present outstanding with these local authorities.

The Under-Secretary of State for Wales (Mr. Wyn Roberts): No local authority, to my knowledge, has frozen grant payments. As at 6 December, 26 local authorities had suspended approvals of discretionary grants. The total number of applications outstanding in Wales is about 90,000. It is not possible to break this figure down to individual authorities, although the Welsh Office is taking steps to collect this information in future.

Mr. Rowlands: Is the Under-Secretary of State aware that 90,000 applicants now—and yet more by 31 March —will be left knowing that there is no hope of making home improvements and that their homes will be blighted? Instead of giving us pat answers, will the Minister hold a summit meeting with Welsh local authorities to arrange the financing of that enormous backlog, so that people can improve their homes, just as the Minister and the Government have encouraged them to do.?

Mr. Roberts: As ever, the hon. Gentleman is mistaken. He must be aware of the special arrangements that we have made for this year. We have told local authorities that any spending on renovation grants above 50 per cent. of their allocation will be met by the Government.

Sir Raymond Gower: I appreciate what my hon. Friend has said, but will he bear in mind that Wales has a significantly higher proportion of owner-occupiers than the United Kingdom in general and that many of those owners have very limited means? Will he also bear in mind that the housing stock in Wales is older on average than that in the United Kingdom, and that the need for repair and renovation in the Principality is probably greater than that in most of the United Kingdom?

Mr. Roberts: My hon. Friend's description of owner-occupation and of the housing stock in Wales is right. Because of the conditions revealed by the house condition survey, and for other reasons, my right hon. Friend the Chancellor of the Exchequer introduced the 90 per cent.

grant, which will remain available after 31 March 1984 in cases of hardship. We welcome the enormous number of applications for grants, which will be reflected in an improvement in the house condition survey.

Mr. Wigley: Does the Minister accept that there has been a saga of monumental blunders on the part of the Welsh Office in failing to plan the cash flow for such grants? Is it not unrealistic to end the right to apply for grants on 31 March and on the same day to end the money that is available? The hon. Gentleman and the Government know perfectly well that applicants have 12 months in which to take up the grant. Should there not therefore be a 12-month take-up period after the deadline for applications?

Mr. Roberts: I hope that there has never been any question in anyone's mind of extending the period during which applications can be made beyond 31 March 1984. The hon. Gentleman is well aware that all that has to happen is that the application must be made by 31 March. It does not necessarily have to be processed, approved or paid for. We have had great success with the policy, as an enormous number of applications have been made. Indeed, the policy is just as successful as our council house sales policy.

Mr. Hubbard-Miles: Is my hon. Friend aware that in November 1982 one of the largest housing authorities in Wales was urged by some of its members to redeploy existing staff or to take on additional staff to take maximum advantage of the special short-term home improvement scheme? Is he aware that if the authority had accepted that advice many of the current 1,000 applications would have been processed and paid by now?

Mr. Roberts: My hon. Friend is absolutely right. We have made special arrangements to meet the financial costs this year, and the sky was the limit last year. This year an extra £50 million has been made available to local authorities.

Mr. Geraint Howells: May home owners in Wales have an assurance that the Government have no plans to abandon the home improvement scheme in 1984–85?

Mr. Roberts: We have always made it clear that the 90 per cent. grant was for a limited period. Although the period for applying for a grant comes to an end on 31 March next year, 75 per cent. improvement grants will continue to be available. I stress that anyone who applies by 31 March next year for the higher rate of grant will get it.

Mr. Barry Jones: The Minister claims success, but why are the local authorities angry and bitter'' Does he agree that poorer occupiers of older homes will suffer most as their houses progress towards massive dilapidation?

Mr. Roberts: That is not true. The grant at the higher rate is to help poorer householders, and they are taking advantage of it. The local authorities have no cause whatsoever to be angry with anyone except themselves because they have failed to take advantage of the opportunities given to them by the Government.

Mr. Speaker: Order. I have allowed a good run on this question, which relates to an important matter in Wales, but I ask for shorter supplementary questions and shorter answers.

Mr. Rowlands: On a point of order, Mr. Speaker.

Mr. Speaker: No. I shall take the hon. Gentleman's point of order later.

Dental Treatment (Costs)

Mr. Coleman: asked the Secretary of State for Wales what representations he has received concerning the Government's proposal to increase the charges for dental treatment; and if he will make a statement.

Mr. Wyn Roberts: My right hon. Friend has received seven letters about dental charges in recent weeks, including three from the hon. Gentleman. The Government are currently considering dental charges and will make a statement in due course.

Mr. Coleman: Is the Minister aware of the concern expressed by the profession and health authorities that, as a result of the proposed charges, the considerable sums being spent on dental education will be wasted? Does he agree that the route to good health is good dental health? Is that not the way to an economic Health Service?

Mr. Roberts: I remind the hon. Gentleman that dental charges were first introduced by a Labour Government in May 1951.

Mr. Coleman: We are talking about now.

Mr. Roberts: Perhaps that is why the hon. Gentleman, like me, should put his money where his mouth is. The popularly held belief is that dental charges have a deterrent effect. That may be so in the short term, but there is no firm evidence that they have a significant effect in the long term.

Sir Anthony Meyer: Does my hon. Friend recognise that in recent years dental charges have risen markedly more than other National Health Service charges? In view of the greater political difficulty of increasing charges for other health services, will my hon. Friend look at the matter again since it appears that dental charges have risen far too much?

Mr. Roberts: I advise my hon. Friend to await the forthcoming statement.

Mr. Rowlands: rose—

Mr. Speaker: Order. I think that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) wishes to give notice that he wants to raise the issue contained in question No. 1 on the Adjournment. Is that right?

Mr. Rowlands: Yes, Mr. Speaker.

Labour Statistics

Mr. Ioan Evans: asked the Secretary of State for Wales how many people were employed in Wales in June 1979 and the latest available date; and how many were employed in manufacturing industry on those dates.

The Secretary of State for Wales (Mr. Nicholas Edwards): In addition to those who are self-employed, there were 1,029,000 employees in employment in June 1979 and 883,000 in June 1983. The figures for manufacturing industry were 311,000 and 208,000, respectively.

Mr. Evans: Does the Secretary of State realise that there has been a massive loss of jobs in Wales since the

Government came to office? We welcome the possibility of the Nissan plant coming to Wales in the near future, whether it be to north or to south Wales. Does the right hon. Gentleman realise that to replace only 100,000 jobs —he spoke about 200,000 jobs—we would need 20 Nissan plants with 5,000 workers at each plant? We would need that just to replace the number of jobs that have been lost under this Government?

Mr. Edwards: The hon. Gentleman should realise that we are talking not about a loss of jobs but about a considerable transfer and switch in the nature of the economy, with a growth of jobs in self-employment and an increase in the numbers employed in the service sector. In the manufacturing sector, the number of jobs expected from offers of selective financial assistance to new factory projects financed by the Government since May 1979 is more than 50,000. Many jobs are coming, even in the manufacturing sector.

Mr. Gwilym Jones: Does my right hon. Friend agree that the success of the Government's policy in freeing manufacturing companies from the state sector has resulted in companies such as Amersham International in my constituency recently announcing 200 new jobs in Cardiff?

Mr. Edwards: It is true that some successful companies in Wales are expanding their operations. Another is AB Electronics. I am glad to be able to tell my hon. Friend that WlNvest is today announcing four new projects for Cardiff and Tredegar, promising 300 new jobs. I discussed several of these projects during my recent tour of the United States.

Mr. Ray Powell: Is the Secretary of State aware that the community programme cutbacks mean losses of 64 jobs in Ogmore in one scheme alone, 800 jobs in mid-Glamorgan and thousands of jobs in Wales? Does he appreciate that this will increase unemployment in Wales? Is it not possible for more funding to be made available to the Manpower Services Commission to carry out some of the schemes forecast for 1984?

Mr. Edwards: As the Manpower Services Commission for Wales confirmed to me on Friday, that is really a complete misuse of language. What the hon. Gentleman calls "cutbacks" are the result of the number of applications having exceeded our original estimate. A larger number of community service schemes have been allocated to Wales than we would have expected from the original allocation to the United Kingdom as a whole, and we have now come up against the spending limits. It is true that a number of schemes are having to be postponed until the next financial year, when they can be considered again. When one comes up against a cash limit because demand has exceeded the original expectation, it is completely wrong to call that a cutback.

Mr. Mark Robinson: Does my right hon. Friend agree that there has in fact been considerable success in attracting new jobs and new industries to the region? From the questions that one hears from Labour Members from time to time, one wonders whether that is realised or recognised.

Mr. Edwards: I have already referred to WlNvest. During the first eight months of its operations it has


handled 161 company visits to Wales. Allocations to WDA factories this year are well up on last year's all-time record figure.

Trespass (Common Land)

Mr. Hooson: asked the Secretary of State for Wales whether in the light of recent squatting incidents in mid-Wales, he will consider changes in (a) the law of trespass, and (b) the law relating to common land.

The Minister of State, Welsh Office (Mr. John Stradling Thomas): The recent announcement by my right hon. and learned Friend the Home Secretary of the preparation of proposals for a new criminal offence relating to trespass on residential premises in England and Wales represents the Government's view on the extent of the changes now needed in the law of trespass to deal with intrusions into people's homes. There are no present plans for further legislation on the question of trespass generally.

Mr. Hooson: The making of trespass on residential property a criminal offence is helpful and overdue, but does my hon. Friend agree that squatting also occurs outdoors — for example, near the Brecon Beacons mountain centre at Mynydd Illtyd? Is there not a need for a new legal category of public nuisance to prevent squatting on non-residential property, whether it be private or common land?

Mr. Stradling Thomas: As my hon. Friend and the House will be aware, we are dealing with a complicated area of the law. If my hon. Friend will give me details of the changes that he has in mind, I shall consider them and consult my right hon. Friend the Secretary of State for the Environment.

Dr. Roger Thomas: Is the Minister aware that some of us regard parts of north-east Dyfed as being in mid-Wales? Can he not strengthen the power of local authority planning and environmental health departments and, at times, even of the police, to prevent the increasing instances of great discord that hippies and such people cause in our community by squatting on land that they obviously do not own?

Mr. Stradling Thomas: I am sure that the hon. Gentleman is aware that there are problems of enforcement in that area of the law. I should be grateful if he would send me any constructive suggestions that he may have to deal with that difficult section of the law.

Housing Investment Programme

Dr. Marek: asked the Secretary of State for Wales what factors he is taking into account in fixing the local authority housing investment programme allocations for 1984–85.

Mr. Ron Davies: asked the Secretary of State for Wales what will be the total allocation of capital finance to Welsh local authorities for housing purposes for the year 1984–85.

Mr. Wyn Roberts: Local authorities were informed earlier this month that their allocations for 1984–85 would not be less than 80 per cent. of this year's allocation; that is about £111 million. My right hon. Friend told the consultative council last week that further sums would be available, and he will be announcing the actual allocations

before the House rises for the Christmas recess. In deciding them, the factors he is taking into account include the rate at which authorities are achieving council house sales as well as their likely expenditure in 1983–84, following the request that expenditure should be contained to the level committed by 2 December.

Dr. Marek: Did not the Minister say some three weeks ago that the priority local authorities gave to new build was entirely a matter for them? If so, will he give local authorities in Wales permission to build new council houses to satisfy the long and ever-increasing waiting lists in the Principality?

Mr. Roberts: It is very much a matter for local authorities to decide their priorities. During the past six years some £299 million has been spent on new build, £134 million on repairs to council stock and only £110 million on renovation grants.

Mr. Ron Davies: Does the Minister agree that when he stands at the Dispatch Box and makes such a statement, he is really announcing a further 20 per cent. cut in housing expenditure in Wales? Does he realise that that cut, which is in addition to the 50 per cent. reduction in housing expenditure from 1979 to date, is presenting local authorities in Wales with a crisis? In my local authority area of Rhymney Valley, more than 2,000 people are on the waiting list, but only 36 houses will be built next year. Does the Minister think that he should be proud of that record?

Mr. Roberts: I have made no announcement today about a 20 per cent. cut for next year. In fact, I have just told the House that my right hon. Friend the Secretary of State has said that there will be further moneys available in addition to the 80 per cent. of this year's allocation.
The hon. Gentleman must be aware that there has been a decline in new build for a number of years, including the years when the Labour Government were in office.

Mr. Mark Robinson: Does my hon. Friend agree that if local authorities had been a little keener to co-operate with Government policy during the past few years, we might not today be facing the sort of crisis that we are supposed to be facing?

Mr. Roberts: I do not think that we are in a crisis. The position that we face is similar to that which we faced when we were urging local authorities to sell council houses. It took them a long time to reconcile themselves to that. Council house sales have now proved extremely popular and are a source of considerable additional finance to local authorities for purposes such as renovation grants.

Mr. Ioan Evans: Is the Minister aware that the tough curbs imposed on public housing investment the autumn statement will have a serious effect on capital expenditure in Wales well beyond the 1984–85 financial year? While he is discussing housing matters with the local authorities, will he look into the problem of housing benefit, bearing in mind that it has been estimated that more than 270,000 pensioners in the United Kingdom will lose their housing benefit completely? How many will lose it in Wales?

Mr. Roberts: The question is not about housing benefit, but about housing investment programmes. The autumn statement is a matter for my right hon. Friend the Chancellor of the Exchequer.

Singleton Hospital, Swansea

Mr. Gareth Wardell: asked the Secretary of State for Wales when the planned new paediatric/obstetric unit at Singleton hospital, Swansea will be completed.

Mr. Wyn Roberts: West Glamorgan health authority is planning on the basis that the new unit will be completed during 1988–89.

Mr. Wardell: May we have an assurance that the new system of capital expenditure allocations to health authorities in Wales will in no way delay the implementation of the new unit at Singleton hospital?

Mr. Roberts: I think that I can give the hon. Gentleman that assurance.

Job Creation

Mr. Geraint Howells: asked the Secretary of State for Wales what progress he expects in measures for the reduction of unemployment in Wales during the coming year.

Mr. Nicholas Edwards: I never make forecasts of that kind, but the Government will continue a wide range of measures to encourage economic development and so reduce unemployment throughout Wales.

Mr. Howells: Will the right hon. Gentleman see the Prime Minister before Christmas and persuade her to drop her monetarist policies and change course, so that unemployment in Wales next year may be reduced by 50,000?

Mr. Edwards: I have no intention of asking my right hon. Friend to do anything of the kind, particularly at a time when inflation is at its lowest level for many years, when economic growth is well established and when the unemployment figures have fallen for several consecutive months in Wales.

Motorway Access

Mr. Roy Hughes: asked the Secretary of State for Wales what steps he is taking to improve the motorway access into Wales.

Mr. Nicholas Edwards: I work in close co-operation with my right hon. Friend the Secretary of State for Transport to ensure the best possible motorway access into Wales.

Mr. Hughes: Will the Secretary of State confirm that the Severn bridge on the M4 is the only stretch of motorway in the United Kingdom on which tolls are collected? Does he appreciate that last Friday night there was a three-hour wait to cross the bridge and that there was not much evidence of the Welsh "croeso" on that occasion? Is he aware that this is a terrible way to treat the people of Wales?

Mr. Edwards: Hon. Members will agree that the important matter at present is not tolls, which have operated under successive Governments, but to ensure the security of this vital crossing into Wales. My right hon. Friend the Secretary of State for Transport has told the House that he intends to make a very early statement about the matter. I am in close touch with the Department of Transport on the subject.

Sir Raymond Gower: Would some improvement in the flow of traffic result if the tolls for traffic leaving Wales were collected on the Welsh side and the tolls for traffic entering Wales were collected on the other side?

Mr. Edwards: My right hon. Friend the Secretary of State for Transport has announced that he is taking a close new look at all measures for operating the bridge to see whether we can eliminate any unnecesary delay. That is certainly one suggestion that is being considered, and we shall report to the House in due course.

Mr. Barry Jones: Is the right hon. Gentleman utterly determined to obtain a second crossing of the Severn?

Mr. Edwards: I am utterly determined to maintain this vital entry into Wales, which is fundamental to the economy of south Wales. My right hon. Friend has made it clear that the Government recognise the vital importance of the Severn crossing. We are making an assessement about the strengthening of the bridge, which, as the hon. Gentleman will be aware, will be required for many years. Alongside that we are also considering the question of a second crossing. The two matters must be taken together. My right hon. Friend hopes to make an early statement to the House on both matters.

Labour Statistics

Mr. Barry Jones: asked the Secretary of State for Wales by what amount, and by what percentage, unemployment has risen in Wales. Clwyd and the Deeside travel-to-work area.

Mr. Nicholas Edwards: I refer the hon. Gentleman to the reply that I gave him on 31 October, but would add that since September 1983 the number of unemployed claimants in Wales, Clwyd and the Shotton travel-to-work area has, in fact, gone down.

Mr. Jones: The unemployment rate in north-east Wales is very high and clearly makes the arrival of the deputation from Clwyd county council tomorrow of the highest importance. Does the right hon. Gentleman understand our deep anxiety about the delay in launch aid for the Airbus A320, which would underpin 2,000 local jobs? Bearing in mind the availability of excellent sites throughout Wales, what can he tell the House about the Nissan project?

Mr. Edwards: The Government are giving the closest consideration to the representations that have been made about the A320 Airbus project and have been analysing all the information that has been provided recently by companies. There is no fresh information about the Nissan project. I am sure that the hon. Gentleman will welcome a number of new investments that are occurring in northeast Wales, not least the recent decision of the Cooperative Wholesale Society Ltd. to locate its new multimillion pound factory in the hon. Gentleman's constituency, which will provide at least 150 new jobs.

Sir Anthony Meyer: Has my right hon. Friend seen the information that was released at the weekend by the Clwyd county council to the effect that one quarter of manufacturing jobs in the country are in firms that have their headquarters outside the United Kingdom? In view of that, will it be useful to obtain from the Labour party a final renunciation of its proposal to withdraw from the EEC in view of the sensitivity of those jobs to such a threat?

Mr. Edwards: During my recent visit to the United States I discussed the investment projects to be conducted by a number of United States companies which were considering setting up projects in Clwyd. They were all doing so on the ground that this would be a base for operating in the European Community as a whole.

Dr. Marek: Is the Minister aware that recently one of my constituents wrote to me asking how he could get a job, but, before I received the letter, the Wrexham Conservative association stepped in and managed to find him one? Will the right hon. Gentleman advise and help the Wrexham Conservative association to find jobs for the other 9,999 people in the Wrexham area who also want jobs?

Mr. Edwards: I am glad that the people have recognised that it is more sensible to go to the Conservative association than to their Member of Parliament. I hope that the hon. Gentleman will remember that in any single month between 15,000 and 30,000 people go on and off the register of unemployment in Wales. There is a rapid turnover of jobs. That underlies the unemployment statistics, which we all regret are still too high.

Gwynedd Area Health Authority

Mr. Wigley: asked the Secretary of State for Wales what representations he has received from the Gwynedd area health authority concerning his financial allocation to that authority for 1984–85; and if he will discuss with the area health authority the consequences of this allocation on the maintenance and development of health care.

Mr. Wyn Roberts: The Department has recently received a letter from the chairman of Gwynedd health authority regarding resource planning assumptions for the 10 years from 1984–85, and I shall let the hon. Member have a copy of the reply. My right hon. Friend has not yet decided the allocations to individual health authorities for 1984–85.

Mr. Wigley: Will the Minister confirm that that reply contains a refusal to implement the cuts being demanded by the Welsh Office? Is he aware that, on the basis of the notional combined capital and revenue allocations issued by the Welsh Office to the Gwynedd area health authority, that authority will be facing a recurring deficiency of £1·5 million a year and that that would mean either the mothballing of every capital development for 10 years, including hospitals in Llandudno, northern Anglesey, Dwyfor, north Merioneth and the Caernarvon area or, alternatively, mothballing provisions for geriatric and psychiatric facilities in the new district hospital at Bangor? In those circumstances, will the right hon. Gentleman tell us whether those notional figures are definite for the next two years or whether they will be withdrawn by the Welsh Office?

Mr. Roberts: The hon. Gentleman is unnecessarily spreading alarm and despondency. The health authorities appear to have misinterpreted the draft guidance and the planning assumptions that we gave them. It is wrong to talk about a cut. Reports of the health authorities meeting of 28 November in the press about a £1·4 million cut are a miscalculation, based on draft guidance containing notional figures for planning purposes. The guidance and the figures are under review. The hon. Gentleman should

attach no more importance to the 0·5 per cent. gross figure assumption that we have given the authorities than that it is a planning assumption.

Welsh Development Agency

Mr. David Knox: asked the Secretary of State for Wales how many new factory units, and how many square feet of factory space, have been built by the Welsh Development Agency since its inception.

Mr. Nicholas Edwards: Between January 1976 and November 1983 the Welsh Development Agency completed 1,159 advance factory units, 12 bespoke factory units and 74 factory extensions totalling in all more than 8·8 million sq ft.

Mr. Knox: Does my right hon. Friend agree that this additional factory capacity will facilitate a substantial expansion in Wales in future?

Mr. Edwards: That is true, especially as in the first 11 months of this year the WDA has allocated over 280 factories and 1·4 million sq ft of floor space to firms that are forecasting over 5,300 jobs. That is already more than the total for last year.

Mr. Joan Evans: While we welcome the additional factory space provided by the Welsh Development Agency, which was created by the previous Labour Government and opposed by the then Tory Opposition, may I ask how much factory space has been made available to let since the Government took office because of closures, liquidations and redundancies?

Mr. Edwards: Since May 1979 the WDA has allocated about 900 units and 7·1 million sq ft at a time when 220 units and 4·4 million sq ft, often in the form of older factories, have closed down. Substantially more new factories have been allocated and substantially more new factory space has been made available than is involved in the closures that have taken place. I am glad to inform the House that the WDA's expenditure on the programme has been £280 million, of which £220 million has been expended under the present Government.

National Health Service

Mr. Ray Powell: asked the Secretary of State for Wales if he will make a statement about the Health Service resources for Wales planned for the period 1983–84 to 1993–94, indicating reductions or increases.

Mr. Wyn Roberts: In 1983–84 expenditure on the National Health Service in Wales is expected to be at the record high of £790 million, of which almost £543 million is the expected revenue spending of district health authorities. Purely for planning purposes, we have issued a resource assumption for hospital and community health services that there will be 0·5 per cent. per annum growth in the years 1984–85 to 1993–94. My right hon. Friend expects shortly to announce the actual allocations for the National Health Service in Wales in 1984–85.

Mr. Powell: Does the Minister appreciate that a 1·5 per cent. increase in spending is required if we are only to stand still? Area health authorities will find it impossible, with this allocation, to reduce waiting lists, to cure patients suffering from kidney disorders and to ensure that the Health Service operates at the level it stood in 1979 when


the Conservatives took over. We want greater investment and wish to ensure that the second phase of development of new hospitals, such as the Bridgend project, is carried out. It is clear that it will not be carried out within the allocation that the Minister has announced.

Mr. Roberts: The hon. Gentleman is speaking in complete ignorance of what the Government are proposing to allocate next year. He seems not to appreciate—this is true, of the hon. Member for Caernarfon (Mr. Wigley) —that all we have done is to give authorities a planning assumption of 0·5 per cent. The allocation will be made in due course. I counsel the hon. Gentleman to consider the Government's honourable record of spending on the Health Service since 1979.

River Severn (Crossing)

Mr. Grist: asked the Secretary of State for Wales what representations he has received relating to a new Severn river crossing.

Mr. Nicholas Edwards: I have received representations on this matter from private individuals, local authorities and from a number of firms and representatives of the business community in south Wales.

Mr. Grist: There will be a widespread welcome for my right hon. Friend's announcement that a statement is to be made on the matter shortly. We hope that the statement will be made before Christmas. Since we all believe it to be inevitable that the second crossing will eventually be announced, the sooner the announcement is made, the better.

Mr. Edwards: My right hon. Friend and I are considering the matter closely and with the greatest urgency. Indeed, I met him and his officials in my office at the end of last week. It is more likely, however, that the statement will be made early in the new year than before the Christmas recess.

Mr. Coleman: In view of the urgent need in Wales for a second crossing over the Severn, would it not be prudent for the Welsh Office to develop the other entry into Wales —the A465?

Mr. Edwards: It is important to develop all the possible entries into Wales. I welcome the important motorway link with Telford, which will have profound importance for mid-Wales and north Wales. There is also a great deal of work in progress on the A40 and the links with mid-Wales, which will help us to avoid sending traffic down the southern corridor which then has to turn north to reach mid-Wales.

Mr. Barry Jones: Would not a second crossing give a massive boost to the steel, cement and construction industries in south Wales? Is the right hon. Gentleman aware that in Cwmbran, on 9 January, Mr. Lloyd Turnbull is to chair a meeting about a second crossing? Will the right hon. Gentleman or one of his Ministers attend that meeting?

Mr. Edwards: I shall consider whether the Welsh Office should be represented at that meeting. However, I do not need to be told about the vital importance of that road link. I have spoken about it on many occasions, and I understand it as well as any hon. Member or anyone in Wales. The Government are determined to ensure that the crossing is as adequate as possible.

Small Firms Information Centres

Mr. Mark Robinson: asked the Secretary of State for Wales how many inquiries were made of small firms information centres in Wales in 1980, 1981 and 1982.

Mr. Nicholas Edwards: My Department has one small firms centre which provides advice and information to small firms throughout Wales. The centre dealt with 7,053 inquiries in 1980, 10,604 in 1981 and 14,929 in 1982.

Mr. Robinson: Does my right hon. Friend agree that these figures show the success of the Government's policy in assisting small firms? In that context, does he welcome the establishment of such enterprise agencies as the Newport enterprise agency and the contribution being made by industry to help those agencies?

Mr. Edwards: It is encouraging that the number of inquiries to the small firms centre should have doubled between 1980 and 1982, and that the number has been increasing since. I also confirm that the enterprise agencies are making a valuable contribution, which I discussed on Friday with the Welsh board of the Manpower Services Commission. We shall seek to encourage these agencies and welcome the contributions being made to them by industry wherever they are set up.

Mr. Roy Hughes: Does the Secretary of State appreciate that a number of small building firms in Newport are finding that their improvement grant jobs are being stopped when they are half completed because of the Government's new restrictions? This is when the materials are virtually rotting in the building yards and building workers are standing idly in the dole queues. Surely those are the economics of the madhouse.

Mr. Edwards: Newport council decided, unlike most other district authorities in Wales, not to give improvement grants the highest priority and not to use the maximum quantity of resources available for improvement grants, but to use capital resources for other projects which, presumably, it considered had higher priority. That fact must also be taken into account.

Mr. Rowe: Does my right hon. Friend agree that, although the number of inquiries about small firms is encouraging, the loan guarantee scheme has played an enormous and valuable part in the formation of new small businesses? Will he assure the House that he will do everything in his power to support its continuance and improvement?

Mr. Edwards: The loan guarantee scheme has made a notable contribution since being amended. I welcome that. Perhaps the greatest service that we can now render is to improve the supply of information through professional bodies and in other ways so that businesses are fully aware of what can be done through that scheme.

Oral Answers to Questions — CHURCH COMMISSIONERS

Ecclesiastical Buildings

Mr. Chapman: asked the hon. Member for Wokingham, as representing the Church Commissioners, how many ecclesiastical buildings for which the commissioners are responsible of formerly grade A classification have been demolished in the past 10 years; and what percentage of the total number this figure represents.

The Second Church Estates Commissioner, representing Church Commissioners (Sir William van Straubenzee): Between 1 April 1969, when the pastoral measure came into effect, and 30 November 1983, the commissioners have been responsible for deciding the future of 83 grade A listed redundant churches. Only one of these buildings has been demolished. A further 23 have been appropriated to suitable new uses and the balance of 59 have been vested in the redundant churches fund for care and maintenance.

Mr. Chapman: Many people will find my hon. Friend's reply somewhat surprising, but immensely reassuring. Presumably the church that has been demolished is Holy Trinity church, Rugby. I understand that there are about 2,250 grade A churches in England alone. Would my hon. Friend carry to the Church Commissioners the congratulations of all who care for our ecclesiastical architectural heritage, and our thanks for their success in resisting the demolition of our architecture?

Sir William van Straubenzee: I am overwhelmed, but much obliged to my hon. Friend. This treatment is somewhat different from that to which I am accustomed. The pastoral measure, as recently amended, contains very strict safeguards. That is why, for example, the 1983 edition of The English Heritage Monitor, which takes a neutral stance, is able to comment that
a listed building is over three times more likely to be demolished than a listed church.

Mr. Robert Atkins: We have an incredible heritage of grade A listed churches and other old churches. Does it not, therefore, behove the Church Commissioners —who, as my hon. Friend the Member for Chipping Barnet (Mr. Chapman) said, are already doing a wonderful job —to press the Government even more strongly to ensure that the funds required to maintain that heritage are forthcoming?

Sir William van Straubenzee: I take the point, but it would be churlish of me not to acknowledge publicly the considerable advance that has been made in the partnership between Church and state for the help of churches in use. Of course, I refer to all churches in use and not just those of the Church of England.

Payroll Statistics

Mr. Greenway: asked the hon. Member for Wokingham, as representing the Church Commissioners, how many currently serving archbishops, diocesan bishops and suffragan bishops are on the payroll of the Church Commissioners; and how this compares with 30, 20, 15, 10 and five years ago, respectively.

Sir William van Straubenzee: As the answer contains a number of figures I will, with permission, circulate it in the Official Report.
However, I can tell my hon. Friend that the main change in the figures concerns suffragan bishops. The numbers have risen from 41 to 63 in the past 30 years.

Mr. Greenway: I thank my hon. Friend for that reply. Does he feel that those whom he represents would be spending money well if they were to pay for an archbishop of London and one or two new diocesan bishops to reflect the population movement? Could he explain why they are paying so many more suffragan bishops than before, and

what their functions are? Can my hon. Friend imagine what Mrs. Proudie, the wife of the Bishop of Barchester, would have said if a suffragan bishop had been appointed to Barchester?

Sir William van Straubenzee: I shall not speculate about Mrs. Proudie or an archbishop of London. That is not the responsibility of the Church Commissioners. There is now an effective sieve through which any new proposals must go by way of a diocese commission of which, by chance, I happen to be the chairman. My hon. Friend can feel that there is now a much closer scrutiny than there was, perhaps, in the past.

Sir David Price: Have the Church Commissioners put their minds to what, in their opinion, is the optimum size for a modern diocese and how many parish clergy it is reasonable, under modern conditions, for a bishop to guide, inspire and occasionally, control?

Sir William van Straubenzee: There will be many widely differing views as to what the perfect number should be. As my hon. Friend will be aware, these will reflect geographical factors. As he will also be aware, there is a system for equating the number of clergy in a diocese under the Sheffield scheme, which goes some way, but only some, towards meeting my hon. Friend's point.

Mr. J. Enoch Powell: Is there any desirable limit to the expansion referred to in the hon. Gentleman's reply in view of the feeling, among a growing proportion of the laity of the Church of England, that there is a tendency for the encroachment of the authority of the biships as against other sources of authority within the Church?

Sir William van Straubenzee: That is one of the many considerations which I know are in the mind of, for example, the General Synod, which has now to approve any proposal by a diocesan bishop for an additional suffragan.

Following are the figures:
At 1 December 1983 there were two archbishops, 42 diocesan bishops and 63 suffragan bishops on the payroll of the Church Commissioners, including several posts which were temporarily vacant.
Over the past 30 years the number of archbishops has remained at two and there has been an increase of one in the number of diocesan bishops —that is, the bishop in Europe in 1980; during that time the number of suffragan bishops has varied over the periods in question as follows:



Number


1953
41


1963
44


1968
52


1973
56


1978
59

Oral Answers to Questions — THE ARTS

Royal Opera House and Royal Shakespeare Company

Sir David Price: asked the Under-Secretary of State answering in respect of the Arts whether the Government are yet in a position to make a statement on the Priestley report into the financial affairs of the Royal Opera House and the Royal Shakespeare Company.

The Under-Secretary of State for the Environment (Mr. William Waldegrave): My noble Friend hopes to be able to make a statement before the Christmas recess.

Sir David Price: Can my hon. Friend give any idea whether the Government accept the proposal of the Priestley committee that funding of the Royal Opera House and the Royal Shakespeare Company should be put on a three-year basis instead of an annual one? If they accept that, will they apply the same reasoning to the entire funding of the Arts Council?

Mr. Waldegrave: I shall draw my noble Friend's attention to what my hon. Friend has said. My hon. Friend will be aware of the difficulties associated with giving three-year guarantees of expenditure in present circumstances.

Mr. Dalyell: Will there be a financial covenant for the Scottish Opera in the Minister's statement?

Mr. Waldegrave: I must leave it to my noble Friend to make his statement in due course.

Arts Council

Mr. Tony Banks: asked the Under-Secretary of State answering in respect of the Arts if he will discuss the effects of cuts on the arts with the Arts Council before announcing the next annual Government grant.

Mr. Waldegrave: My noble Friend is in regular touch with the chairman of the Arts Council on grant requirements and other matters.

Mr. Banks: Will the Minister confirm that the Arts Council has asked for a 20 per cent. increase in funding, the majority of which would be used to clear outstanding deficits to its clients? What is the amount of those deficits?

Mr. Waldegrave: I shall have to write to the hon. Gentleman with regard to the second part of his question. I can confirm that the Arts Council believes that it needs more money than can be given to it in present circumstances. I am sure that the hon. Gentleman will welcome the fact that the central component of the arts budget shows a small but welcome increase in real terms for next year.

Mr. Simon Hughes: Does the Minister agree that one of the problems associated with funding the arts is that his noble Friend, while being responsible for the arts, also represents the Treasury in another place and is responsible for Civil Service personnel and management? Does he further agree that that schizophrenic role cannot give any assurance to the Arts Council that it will be properly funded? Is the Minister aware that that view is now shared by 500 people, who have been prompted to form the first national lobby for the arts, that they met yesterday and that they made it quite clear that they believe the Government are doing a bad job?

Mr. Waldegrave: My noble Friend's relative success with regard to next year's arts budget might lead us to believe that his position in relation to the Treasury has been used to the benefit of the arts. With regard to the conclusions of yesterday's lobby, I was interested in what the hon. Member for Newham, North-West (Mr. Banks) said on the radio this morning. He perfectly fairly pointed out that it is necessary for the arts to put its case strongly under all Governments.

Mr. Beaumont-Dark: Why, when we have to cut essential services, is it considered essential to support arts which are unpopular with the great body of people who

find that more essential services have been cut? Will my hon. Friend bear in mind the fact that many of the people who support minority arts are able to pay the full economic price for their tickets whereas those who need essential services are not able to pay the full price for them?

Mr. Waldegrave: The state makes quite a small contribution to funding the arts as compared with what is paid by individuals. Many hon. Members would regret it if the state did not play its proper role in these matters.

Mrs. Renée Short: Is the Minister aware that the Grand theatre, Wolverhampton is being renovated at considerable cost and with local effort? Is he aware that it is now as beautiful as the Old Vic, although it is a smaller house? Will he ask his noble Friend to bear in mind, when he considers next year's grants for the Arts Council, the fact that it is necessary to support local theatres which are being put into good condition as a result of local efforts, so that they can continue to serve the public?

Mr. Waldegrave: I shall report that concern to my noble Friend. I recently saw the list of theatres in different towns in the provinces that have been supported by the Arts Council over the years. It is an impressive list.

Sir Raymond Gower: With reference to the question asked by my hon. Friend for Birmingham, Selly Oak (Mr. Beaumont-Dark), when we are faced with these difficult choices, might it not be salutary if we recalled the example of some of the continental countries after the bombing of the last war, which, faced with great problems of reconstruction and housing, gave priority to the arts?

Mr. Waldegrave: I personally believe that in terms of the maintenance of a civilised society there is a proper role for the state to play in subsidising the arts.

Mr. Radice: Has the Minister noted that the chairman of the Arts Council, Sir William Rees-Mogg, hardly noted for his support of profligate public spending, was reported in The Times of 24 November as saying:
Many of the organisations supported by the council currently face very serious problems in maintaining their existence in the present restricted financial climate.
Does the Minister think that the Arts Council budget will enable those organisations to survive?

Mr. Waldegrave: It is wrong now, as it was in the past, and as it will be in the future, to guarantee that every organisation supported by the Arts Council will survive or, in certain circumstances, should survive. However, there has been a real terms increase for next year in the Government component of the arts budget, which I am sure the hon. Gentleman welcomes, as I do.

Mr. Murphy: asked the Under-Secretary of State answering in respect of the Arts if he has yet received the response of the Arts Council to the consultation paper on the future funding of the arts after the abolition of the Greater London council and the metropolitan county councils.

Mr. Waldegrave: No, Sir.

Mr. Murphy: I thank my hon. Friend for that answer. Will he confirm that consideration will be given to an arts and heritage council to co-ordinate the funding and administration of the arts in London?

Mr. Waldegrave: I shall draw my hon. Friend's suggestion to the attention of my noble Friend and of the Secretary of State for the Environment.

Mr. Fisher: How many representations has the Minister's noble Friend received on those proposals, and has any single one been in support of the proposals?

Mr. Waldegrave: I shall have to write to the hon. Gentleman on both those points, but I confirm the implication of what he said, that most of the representations have been in favour of the status quo.

Mr. Greenway: Although many present Greater London council grants are well directed, will my hon. Friend note that some of those grants are directed in weird directions that are unacceptable to the ratepayers of London?

Mr. Waldegrave: It would be naive not to agree that, to some extent, there is a widening of sponsorship in a highly politicised direction which, perhaps, is not comparable with what has gone on before.

Mr. Mason: Is the Minister aware that if the South Yorkshire and West Yorkshire county councils are abolished, that will place in jeopardy Opera North, the Leeds Playhouse and the Sheffield Crucible theatre, which are at present funded at the rate of over £200,000 a year? How do the Government propose to save those enterprises in the event of abolition?

Mr. Waldegrave: As the right hon. Gentleman knows, Opera North is on the list in the consultation document

issued by my noble Friend, and is one of the theatres that will receive Government support. The consultation period for that document is still open. The right hon. Gentleman can make representations to my noble Friend that other theatres should be added to the list. However, it remains essential for the districts that will be the successor authorities to play their part in the support of arts organisations.

Mr. Meadowcroft: Does the Minister still believe that the £11 million deficit will be made up by the districts, although the evidence from the districts since he last put forward that opinion is that they are already doing what they can and do not feel able to support functions that are clearly regional in their implications and not just local?

Mr. Waldegrave: I remain of the opinion that the districts and, in London, the boroughs can play a significant part in maintaining those organisations for which there is real public demand. The consultation period remains open for additions to the national list.

Mr. Faulds: Regarding the arm's length principle for the future funding of the arts through local authorities and, primarily, through the Arts Council, has the Minister had drawn to his attention the dangerous implications of the introduction of earmarked moneys, which removes the responsibility for decisions from those bodies?

Mr. Waldegrave: Those issues were drawn to the attention of my noble Friend during the debate on the Priestley report. No one is in doubt about his opinions on that matter.

National Graphical Association (Dispute)

Mr. John Smith(by private notice): asked the Secretary of State for Employment if he will make a statement on the National Graphical Association dispute.

The Secretary of State for Employment (Mr. Tom King): Further negotiations between the Stockport Messenger group and the National Graphical Association took place throughout last week under ACAS chairmanship. These lengthy negotiations ended without agreement in the early hours of Friday morning. I understand that the chairman of the group, Mr. Shah, put forward proposals for the re-employment of the six dismissed strikers, which the NGA did not reject and which could have resolved that issue. However, the NGA refused to give up its demand for a closed shop at Bury and Warrington. On the central issue of the closed shop, the NGA continued to insist on its establishment, but Mr. Shah was not prepared to accept this against the wishes of his employees, and it was on this issue of the closed shop that the negotiations broke down.
Later on Friday morning the contempt proceedings in the High Court in Manchester, which had been adjourned a week before at the request of both the Messenger group and the NGA, were resumed. The NGA was fined a further £150,000 for the unlawful picketing which occurred between 22 and 24 November in its continued defiance of the orders of the court, and £375,000 for the unlawful picketing at Warrington between 29 November and 1 December.
The national council of the NGA met on Saturday and decided to call a one-day strike of all its members on Wednesday 14 December. I trust that both sides of the House will join me in condemning further recourse to indiscriminate and damaging industrial action. It can do nothing to resolve the NGA's dispute with the Stockport Messenger group. All that it will achieve is substantial damage to companies that have no connection with this dispute, and it can only put at risk the jobs of many of its members and other employees as well.
For all those reasons, and not least what are likely to be the serious consequences for the NGA itself, I hope that it will no longer seek to pursue this dispute in defiance of the law.

Mr. John Smith: Is the Secretary of State aware that his account of the negotiations held by ACAS will not be accepted by at least one side to the dispute as entirely accurate and unbiased? Is he aware that between now and Wednesday there is time to avoid a national printing strike, and does he accept that, as the Secretary of State for Employment, he has a responsibility to foster good industrial relations?
As the nation is faced with what could become a damaging national dispute, is it not his duty to help all sides in the dispute to find a settlement? Should he not now invite the parties to meet today, or at the latest tomorrow, at the Department of Employment to discuss with him ways of avoiding the conflict? If he does not do so, will he, as the Minister responsible, not miss an opportunity to take an intelligent initiative, which might tip the balance in favour of a settlement of the dispute?

Mr. King: I have tried to represent the facts of the dispute as fairly as I can. The House will have noticed something that some hon. Members did not appear to accept the last time that I made a statement, which is that the dispute is about the imposition of a closed shop. It is clear that the problem of the reinstatement of the six could be resolved, but now the dispute is seen clearly for what it is—the imposition of a closed shop against the wishes of the employees of the firm concerned.
The right hon. and learned Gentleman appears to have forgotten that a previous Act of Parliament set up the Advisory, Conciliation and Arbitration Service to take over that function of the Ministry of Labour; and because it is an independent body, it has tried to act in the finest traditions of the service to find a means of resolving the dispute. I repeat my request to the right hon. and learned Gentleman to join me at last in saying that there is no advantage in this dispute to either party, and to the NGA in the present position, in pursuing unlawful means in trying to resolve the dispute. I hope that he will urge now, from his position in the Opposition, that the union should stay within the law in its pursuit of the dispute.

Mr. John Smith: Does the Secretary of State note that once again the Government appear to believe that responsibility lies uniquely on the shoulders of the Opposition, and not of the Government, in seeking an initiative to settle the dispute? Is he aware that there are seldom winners in industrial disputes, but that the paramount responsibility of a Secretary of State for Employment is to try to settle disputes, and that the setting up of ACAS in no way removed that responsibility, which is placed upon him by Parliament?

Mr. King: I am in no way seeking to dissociate the Government from their responsibility. I have made it clear that the Government believe that all disputes should be settled within the law. I invited the right hon. and learned Gentleman to join me in that, but I notice that once again he has signally failed to do so.

Several Hon. Members: rose—

Mr. Speaker: Order. I remind the House that this is a private Members' motion day, and that the debate on private Members' motions must end at 7 o'clock. Therefore, I propose to limit supplementary questions on this matter to three from each side of the House.

Mr. Fergus Montgomery: Is my right hon. Friend aware that the printers and typesetters employed by the Messenger newspaper group earn more than the average earnings in other provincial newspapers in the north-west of England; that the employees of that firm and their families are covered by a private medical scheme, which perhaps the NGA does not approve of but which is extremely popular among the employees; and that the company has a profit-sharing scheme? Is it not disgraceful that a man who is standing up for the rights of the majority of his employees should be so vilified by Mr. Wade, who tries to paint him as a Scrooge and skinflint employer, grinding the faces of the poor, when this man started in a small way in 1974, has built up a successful business and has produced the new jobs that the Opposition are always screaming about?

Mr. King: I have heard it said that the wages being paid by Mr. Shah were way below average wages, and I made some inquiries about the matter. On the evidence


available to me, it would appear that he pays wages that are above the average of an NGA employee working for a provincial newspaper in the north-west. On that basis, my hon. Friend's information would appear to be correct. I wish to have no part in the imposition of a closed shop against the wishes of employees, and it would be encouraging if just a few voices from the Opposition would endorse my view.

Dr. David Owen: I pay tribute to ACAS, and is the Minister aware that I believe that he is right not to intervene in the present dispute? The main effort should be to urge the TUC this evening to assert the principle that it has always upheld—the rule of law—and to say that it will not sanction further action by the NGA in defiance of the laws of Britain.

Mr. King: Obviously, I would not wish to anticipate the important meeting this evening of the TUC's employment policy and organisation committee. However, the TUC urged the Post Office Engineering Union to stay within the law. This is an important matter, and if the TUC is concerned, as it must be, about respect for trade unions in Britain, it must try to ensure that the unions operate within the law.

Mr. John Gorst: Will my right hon. Friend continue to resist the Opposition's blandishments for him personally to interfere in this dispute? Does he also recall that during the Grunwick dispute the Labour Secretary of State interfered to no avail whatever?

Mr. King: I have not found the Opposition very blandishing so far, and I have no intention of being attracted by any such siren calls—as though somehow a Minister has a superior ability over the professionalism and experience of the ACAS staff.
Grunwick is often cited as though in some ways there was a similarity. Grunwick was about the refusal of an employer to recognise a union. Mr. Shah has made it absolutely clear that he has no objection whatever to people belonging to a trade union if they so wish. I should have thought that any hon. Member who still stands for personal freedom would support that attitude.

Mr. Michael Howard: Is not the NGA keen to get a closed shop when the workers do not want it because it will in future be able to make those workers strike against their will on pain of exclusion from the union and loss of their jobs? Is it not utterly disgraceful that by their silence the Opposition are prepared to condone such infringements of personal liberty?

Mr. King: I should have thought that on reflection the Opposition would now have realised that within the law

as it stands it is and must be every man's right to belong or not to belong to a union. We have sought to ensure that a closed shop cannot be established except with the overriding support of the vast majority of the people concerned. On all the evidence available to me, that does not seem to be so in the Stockport Messenger group.

Mr. John Ryman: Is it not possible to get a sensible answer from the Minister about this serious dispute? Will he continue to shirk his responsibilities on the slender pretext that statutory machinery exists to effect conciliation? Does he not recognise that in the interests of the rule of law and good industrial relations he has a responsibility to initiate negotiations, which so far have failed?

Mr. King: I have recognised that my first responsibility is to ensure that the facilities and agencies which exist under statute to help in the resolution of these disputes are made available. ACAS has worked many more hours than some Labour Members appear to realise in an effort to resolve this dispute, and I confirm that it remains available to do so if the opportunity exists. The hon. Member invites me to resolve this dispute within the rule of law, but it is the rule of law that I have sought to uphold.

Mr. Doug Hoyle: Does the Secretary of State not agree that Mr. Shah originally reneged on a closed shop agreement, that before going to ACAS agreement had been reached on a post-entry closed shop and that the issue was then about the re-employment of the six people? Does that not prove that once again Mr. Shah has shifted his ground? Surely the right hon. Gentleman should be more interested in conciliation rather than confrontation. As this matter is serious, will he intervene in the dispute and bring the two parties together before this week's damaging strike to the printing industry?

Mr. King: It is incredible that the hon. Gentleman can imagine that hon. Members on both sides remain so ignorant about the origins of this dispute that he can maintain that it is about the reinstatement of six members. He knows perfectly well that those six members were originally called out on strike because of a dispute over the introduction of a closed shop at Bury and Warrington. The hon. Gentleman rewrites history in seeking to represent the dispute as he has. In no way do I seek to attribute blame, but the hon. Gentleman will know that the withdrawal of Mr. Shah and the Messenger group from pursuing their application for an agreement followed the NGA's tearing up of its previous agreement with the Stockport Messenger group.

House Buyers Bill (Mr. Speaker's Ruling)

Mr. Speaker: I have a statement to make about the House Buyers Bill, which is to be debated on Friday.
I have been asked to rule on whether a Member who is a solictor or otherwise engaged in the business of conveyancing, with a pecuniary interest in the House Buyers Bill, ought to vote on the Bill when it comes up for its Second Reading on Friday, in addition to declaring any interest, as is our rule, in the course of debate.
As long ago as 1811, my predecessor Mr. Speaker Abbot defined the practice governing the pecuniary interest of Members as follow:
This interest must be a direct pecuniary interest … and separately belonging to the persons whose votes were questioned, and not in common with the rest of Her Majesty's subjects, or on a matter or state policy.
A public Bill, whether introduced by the Government or by a private Member, is by definition a matter of state policy. So it is for this reason that, since Mr. Speaker Abbot gave his ruling in 1811, there has not been a single instance of a vote being disallowed by the House on a public Bill. Thus, for example, a farmer may vote on a Bill increasing agricultural subsidies and a company director or shareholder may vote on a Bill regulating the industry in which he has a financial interest. On the same principle, Members of the House may vote for a Bill to alter the incidence of taxation which has the effect of diminishing their personal tax liabilities. In each of these instances, although the financial interest is personal, the matter being voted on is one of public policy.
This question was also raised in relation to the Solicitors (Amendment) Bill 1974. On that occasion Mr. Speaker Selwyn Lloyd ruled that a motion to disallow a Member's vote would be out of order.
I have been asked how this ruling is affected by the Lloyd's Bill in the last Parliament, when Members of the House who were members of Lloyd's were advised by the Chair to refrain from voting. The answer is that the Lloyd's Bill was not a public but a private Bill—that is to say, a Bill promoted by a corporation to regulate its own private interests.
The House Buyers Bill is introduced by a private Member. It is, nevertheless, a public Bill and as such a matter of public policy. I have no hesitation in saying that any Member of the House may vote for or against it, regardless of his financial interest. It is, of course, incumbent upon all Members to declare any financial interest in the usual way.

British Airways

The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, I should like to make a statement about British Airways.
The Government's intention of moving British Airways into the private sector was announced by my right hon. Friend the then Secretary of State for Trade in July 1979. Legislation to achieve this was passed in the Civil Aviation Act 1980.
Our original intention was to go ahead with a sale soon after the passing of the Act, but the decline in the airline's profits in 1979–80 and the large losses in the two subsequent years made that impracticable.
Over the past two years, however, decisiveness on the part of management and determined co-operation from the workforce have sharply improved British Airways' productivity; and the airline industry is now emerging from the world recession. British Airways made a net profit of £77 million in the financial year ended last March; and it is set to make significantly higher profits this year.
British Airways has also begun to restore its balance sheet. Since March it has repaid well over £100 million of borrowings without any assistance from the Government. Its external finance limit fixed for 1984–85 means that we expect British Airways to repay at least £160 million of borrowings next year.
Following this transformation of British Airways' financial propects I have decided to aim for privatisation as soon as possible, I hope in early 1985. To this end I propose to establish British Airways as a public limited company under Government ownership in accordance with the 1980 Act.
I am accordingly arranging for the registration of a public limited company under the name of British Airways PLC without at this stage giving it the right to trade, and I shall shortly make an order nominating it as the successor company to the British Airways Board under section 3(2) of the 1980 Act. I shall place a copy of the memorandum and articles of association of the new company in the Library of the House. I also propose soon to make an order under section 10(1) of the 1980 Act appointing 1 April 1984 as the day on which the property, rights, liabilities and obligations of the British Airways Board in the United Kingdom are vested in British Airways PLC. All this needs to be done well in advance of vesting to allow time for the necessary administrative steps, such as arranging the transfer of overseas property and rights from the British Airways Board to British Airways PLC.
Shortly before vesting, British Airways PLC should be issued with a certificate to trade under section 4 of the Companies Act 1980, so that it can take over the airline's business from 1 April. At that stage I shall provide British Airways PLC with the statutory minimum of £50,000 share capital. I shall be seeking a Supplementary Vote for this purpose in due course.
From 1 April 1984 onwards, therefore, British Airways will be trading as a Companies Act company wholly owned by the Government. During this period we shall exercise the degree of financial control appropriate to our role as sole shareholder. I shall inform the House early next year of the regime that will govern relations between the Government and British Airways in the period between


vesting and the offer for sale, but one element will be an assurance in similar terms to that given in 1980 to British Aerospace in similar circumstances, declaring that the Government continue to stand behind the company and will not allow it to default on its debts. This commitment will not of course extend to any debts falling due after the offer for sale.
Final decisions on the timing of privatisation will depend on the airline's financial performance in the meantime, on the state of the stock market and on the general prospects for the airline industry.
There has been considerable interest in the press lately, and in some parts of the airline industry, about whether a capital reconstruction of the airline will be necessary. I have reached no firm decision about this. It will depend in part on British Airways' financial performance over the coming year. My aim is that as far as possible the necessary improvement to the airline's balance sheet should come through its own efforts.
British Airways has remained for too long preparing for take-off. It is a great tribute to Lord King, the British Airways Board and the entire staff of the airline that I can today position the airline on the runway for take-off into the private sector.

Mr. John Prescott: The statement is amazing in two respects. First, the Secretary of State comes to the House today to announce the privatisation of British Airways in 1984 and tomorrow he will come to us with a measure to nationalise London Transport. The Secretary of State is not too worried about ideological inconsistencies. The second amazing thing is that the statement does not reflect what the press says today, which creates difficulty for a new spokesman like myself.
The statement is at least consistent with the Civil Aviation Act 1980, which is designed to privatise British Airways, although that was not in the Conservatives' election manifesto in 1979. We shall continue to oppose the policy as being detrimental to the maintenance of a major public flag carrier on domestic and international routes, many of which are guaranteed by Government agreements and not competition.
The contents of the statement and their much-quoted trailers in the press today leave many of us with the expectation, as stated in the statement, that the Government, if they want an early sale, will certainly have to do some capital debt reconstruction. The Secretary of State today avoided that reality. Perhaps the reality of the market itself in connection with the Cable and Wireless sale and the £40 million sweetener for selling British Telecom reflects the reality of the market. We believe that the taxpayer has been saved a major loss in his investment and that the City boys have lost a tremendous gain in the Christmas bargain giveaway.
May I ask the Secretary of State some questions following his limited statement? Do the Government intend to retain 49 per cent. or 51 per cent. of shares in British Airways as envisaged when the Bill was introduced in 1979?
Does the right hon. Gentleman envisage problems with the pension fund in the funding of this sale, and will the Government be prepared to act as a guarantor to the fund before such a sale? In view of the growing uncertainty in the civil aviation industry, and in view of the hopes expressed in the 1980 Act for greater competition through

privatisation, the reality of Laker and its collapse and the prospect of British Caledonian, gravely concerned at a privatised competitor controlling 83 per cent. of the scheduled markets, threatening to leave Gatwick, will he now consider a review of civil aviation policy while awaiting the sale?
Finally, in any future prospective sale, will the right hon. Gentleman ensure that the Opposition's policy to retain a major public sector flag carrier is added to the prospectus of that sale, and make it clear that people will not benefit from the plundering of this national asset?

Mr. Ridley: I apologise to the hon. Gentleman for the fact that he was not able to read the full details of the statement in the press. That appears to be a plus, after recent experiences. The hon. Gentleman is able to read the full text of the London Regional Transport Bill, to which he also referred, which will be a move in the right direction, as is this statement, towards efficiency, and, I hope, the private sector eventually, too.
The hon. Gentleman asked about a capital reconstruction. As I said, I think it is possible that one will not be necessary, but I am not certain about that. A great deal can be done by British Airways to get its own balance sheet into order in time.
We have not finally decided whether to sell 100 per cent. but the probability is that we will when the time comes to go to market. That is not finally decided. The pension fund can be put into good shape before privatisation without much difficulty.
Finally, the hon. Gentleman asked about a review of civil aviation policy. I agree that the prospective privatisation of British Airways raises implications for competition and for the sound development of the British airline industry. The Civil Aviation Act 1982 places certain responsibilities in this area on the Civil Aviation Authority. I have therefore asked the chairman of the authority for advice and he has responded that the authority will review these matters in consultation with the industry and representatives of users and make any desirable changes within the framework of the Act in its statement of policies on air transport licensing or other recommendations. I welcome that.

Mr. Kenneth Warren: I welcome my right hon. Friend's statement and particularly his reference to the Civil Aviation Authority under the Civil Aviation Act 1982, but will he draw to the particular attention of the authority, first, the recently issued megalicences which reduce the opportunity apparently of other airlines to take over routes that British Airways may decide to give up or which could be bought up from British Airways; and secondly, the pool agreements which exist between British Airways and many other continental airlines operating within Europe?

Mr. Ridley: I am grateful to my hon. Friend, but I am sure that he would not like me to express any view about what the CAA review might reveal. Therefore, I think it would be best if I did not comment on his two helpful suggestions.

Mr. Geoffrey Robinson: Is the Minister aware that he is being completely dishonest with himself and with this House— [HON. MEMBERS: "Oh."] — if he pretends there is the slightest hope of British Airways repaying its capital debts in the period that


he envisages for privatisation? Those debts cannot be repaid in the foreseeable future even on the current good trading performance. Will the Minister therefore give an assurance that the bulk of those debts will be repaid by British Airways before privatisation, since otherwise a major national asset will be flogged off at a knockdown price — in all probability at less than one year's earnings?

Mr. Ridley: The hon. Gentleman is wrong. I resent his suggestion that there is anything dishonest in what I said. Not only is it possible for British Airways to earn a great deal more profit—the way it is going now, it seems set fair to do so in the time scale that I have set out—but it can do other things to improve its balance sheet. The board will, I know, be reviewing the value of its assets between now and flotation so that it can certify in the prospectus that the airline's assets are reasonably valued in the published balance sheets. No doubt the board will consider whether there are good grounds for revaluing particular assets. The decision on this is for the board, but that too could make a contribution to its balance sheet state.

Mr. David Howell: While I strongly welcome my right hon. Friend's announcement about moving airways out of the state sector, does he agree that, even after privatisation, British Airways will still be the most enormous domestic European and intercontinental airline? Does he accept that an opportunity might be taken now for creating conditions in which at least two, rather than one, substantial airline operators might emerge, for the benefit of both customers and competition?

Mr. Ridley: I am grateful to my right hon. Friend. He will know, from his great experience of this industry, that Parliament has taken the power from the Government to alter the allocation of routes and has placed it, subject to the conditions of the Civil Aviation Act 1982, with the Civil Aviation Authority. For that reason I have asked the CAA to look at its policy in this respect. What my right hon. Friend has said will surely be well taken by the Civil Aviation Authority in considering its policy.

Mr. Stephen Ross: I acknowledge the achievements of Lord King and the staff of British Airways in getting the airline into profit and I welcome the second part of the Minister's statement about the appointment of the chairman of the CAA, but will he give an assurance that he will give adequate time for those matters to be sorted out, particularly with regard to routes? Will he also take on board the wishes of many hon. Members, certainly those on the Liberal Bench, that there should be shares for employees in British Airways when it is finally privatised?

Mr. Ridley: I assure the hon. Gentleman that we will include a share scheme for employees in the arrangements for privatisation, and I thoroughly welcome his general support. On his point about time, the review of civil aviation policy must be completed before privatisation, and any policy change must take place long before flotation; otherwise the market would be confused about BA's position, which would be the worst thing that could happen.

Mr. Nicholas Soames: Will my right hon. Friend assure the House that he will continue to give deep

consideration to the sensible and careful proposals put forward by British Caledonian? Does he agree that there are wider implications than simply the privatisation of BA, such as airport policy?

Mr. Ridley: I agree with my hon. Friend's second point. Airport policy is within the scope of the CAA's review. As the hon. Member for Kingston upon Hull, East (Mr. Prescott) said, competition is with the foreign airlines on the same route for the majority of our designated overseas routes. There cannot be competition for routes where there is not a designation.
Although I accept that the competitive position needs watching, the airline industry is not similar to other industries where the imbalance of size could lead to a highly uncompetitive position. The best way to make competition more fair is to have BA in the private sector. We know how much it was able to lose in the public sector, which could have been an anti-competitive measure—although it did not do it for that reason. Privatising BA will bring the same market disciplines to bear on both BA and its competitors.

Mr. Lewis Carter-Jones: Will the Minister clarify the position on creative accountancy and historic cost accounting for BA, so that the public who want to make a purchase will know the true position? As Lord King has achieved a tremendous turnaround, will the right hon. Gentleman allow him sufficient time to run BA so that it can repay its debts to the country?

Mr. Ridley: I shall not try to become involved in the details of how depreciation should be calculated; it is better to leave that to the accountants. I am sure that they will come forward with the right figures when the prospectus is eventually produced.
I am grateful to the hon. Gentleman for his remarks about Lord King, who is very keen to bring his airline into the private sector as soon as possible.

Mr. Cranley Onslow: Although I welcome my right hon. Friend's recognition of the importance of keeping competition fair between a privatised British Airways and existing independent British operators, can he give the House a better idea of how long it will take for the CAA to complete its review? Will there be an opportunity to debate the review in the House?

Mr. Ridley: I cannot give a precise answer, but can only repeat that, for many reasons, including uncertainty and the demands of the market, it is essential that the review is completed and Government decisions taken as quickly as possible.
My right hon. Friend the Leader of the House is not here, but I shall draw my hon. Friend's remarks about a debate to his attention.

Mr. Robin Corbett: Will not the Secretary of State have the grace to blush at this proposed fiddle on the taxpayer? Does he acknowledge that, although taxpayers' money was used to put BA on its feet, now that profits are to be made they will go into private pockets rather than the public purse?

Mr. Ridley: On the contrary, BA lost a great deal of taxpayers' money—approaching £1 billion—during its bad times. If it had been a privately owned company, its share price would have fallen dramatically. We hope that


the efforts of Lord King, his team and the airline work force will restore profits to the point where the share price rises steeply.

Mr. Robert McCrindle: I welcome the CAA inquiry, and endorse the need to relate any recommendations to future airport policy. Does my right hon. Friend agree that the CAA should have the freedom to investigate the advantages and disadvantages of deregulation, at least where it applies to domestic routes? Can he confirm that there is nothing in the terms of reference of the CAA to preclude a recommendation to the Government to move in that direction?

Mr. Ridley: The precise terms of the CAA review will be made available soon. The principal object is to look at policy on international routes, rather than domestic routes, which is where the problem of imbalance in size between British Airways and the smaller independent airlines occurs.

Mr. Bryan Gould: Will the Secretary of State tell the House a little more about the proposed method of sale? Will Amersham International or Cable and Wireless provide the model?

Mr. Ridley: Cable and Wireless and Amersham International were virtually unique companies. A large number of airlines are quoted on the world stock exchange, so it is much easier for investors to assess their worth. Indeed, we are very much the laggards in not having a large publicly quoted airline, of which there are many in America.

Mr. John Wilkinson (Ruislip-Northwood): May I strongly urge my right hon. Friend to avoid a capital reconstruction of BA? Will not the best discipline on BA, to ensure that it operates commercially and does not squeeze out the independents, be for it to reckon with its accumulated deficit?
The Government will have to resolve the airport policy issue before flotation. For example, if terminal 5 at Heathrow is not carried through, that will mean a loss to BA on its annual operating account of £160 million a year. Terminal 5 must go ahead if there is to be flotation.

Mr. Ridley: I agree with both my hon. Friend's points. It would be desirable for BA to sort out its balance sheet problems. Any movement of that sort is bound to involve airport policy. Indeed, I shall go further and say that whether or not such a move is made, we are reaching the point where we must consider the future of airport policy in the area around London.

Mr. Robert Maclennan: I welcome the extent to which the improvement in BA's balance sheet is due to its efforts and the efforts of Lord King. But does the Secretary of State accept that there is a great need for liberalisation of routes, not privatisation, and that that applies to domestic routes as well as international routes? Will he bear in mind the fact that the liberalisation through British Midland and British Caledonian of domestic routes to Scotland has been of great benefit to the travelling public? Will he ensure that the CAA takes that point on board?

Mr. Ridley: I welcome the hon. Gentleman's conversion to growing liberalisation. He is moving properly into the area of talking sense as he progresses from party to party, and I hope that he will make further progress.

Dr. David Owen: Cheap.

Mr. Ridley: I accept the importance of liberalisation, but we must— at this time when British Airways has recovered and become much more competitive and aggressive — allow the private independent airlines to compete properly.

Mr. Robert Atkins: I welcome what my right hon. Friend said so far as it went, and particularly his reference to Civil Aviation Authority intervention. Will the Government continue to be responsible for the $2·20 exchange rate guarantee of British Airways' $1·1 billion debt, which at present rates is calculated to be £273 million?

Mr. Ridley: A large part of that debt is being redeemed. I appreciate that there is a problem that will have to be dealt with before flotation takes place. I shall make sure that British Airways does not enter the private sector with any advantage in this respect over any other airline.

Several Hon. Members: rose—

Mr. Speaker: Order. I feel that I have an obligation to protect private Members' time. I propose, therefore, to allow questions on this matter to go on for another 10 minutes.

Mr. Mark Fisher: Is the right hon. Gentleman aware that he has totally failed to tell the House what percentage of shares the Government intend to sell, how they intend to sell them, on what exchanges they intend to sell the shares and to whom? On the crucial matter of capital reconstruction, will he agree, as he seemed to tell the House, that about £1,000 million is involved and that if, as he said, BA is to repay that out of profits, as I understood his original statement, that cannot take place within the time scale to which he referred?

Mr. Ridley: The hon. Gentleman must not confuse the losses that were incurred over a couple of years with the balance sheet position; of course, those losses worsened the balance sheet, but one must start from where one was before one subtracts them. It would be very surprising indeed if I were able to announce every detail of the method of sale of this airline 13 months before it is possible for us to go to market. We shall present to 'the House the full details of the method of sale a little nearer the time.

Mr. Anthony Nelson: I join in congratulating my right hon. Friend on his statement. Is he aware that there will be great disappointment that the sale will not take place next year instead of the following year? I recognise that reviews of airports and air routes may be necessary, but is there not a danger that, as trustee of the public purse, my right hon. Friend may find in two years' time that the stock market is at considerably lower levels than the record levels at which it has been running recently? My right hon. Friend may not be prepared to admit that, so I wonder what advice he has received from Lazard's on the subject.

Mr. Ridley: Any attempt by me to enter on to that sort of ground could land my hon. Friend in the disastrous financial results that I have had every time that I have bought a share. An immense number of administrative matters must be dealt with, including the transfer of every


one of BA's routes into the new name of British Airways PLC. Generally, a great amount of detailed work must be done. The soonest we can hope that BA will be ready for flotation is within a year, and that brings us into early 1985.

Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that many of us welcome his news that this new aircraft is on the edge of the runway, but before joining the aircraft may I ask him two questions? According to his figures, we as taxpayers are likely to be owed £600 million at privatisation. Will he accept that it would be unacceptable to many of us for that money to be written off before it is sold to the public? May we have a guarantee that in no way will the taxpayer be involved in underwriting indexation of the pension fund, since hundreds of millions of extra pounds could be involved?

Mr. Ridley: The taxpayer saw his assets losing value during the years when BA made heavy losses. That loss has been made and it must be recouped in one way or another. I do not believe that it is possible somehow to get that money back.

Mr. Corbett: Why not?

Mr. Ridley: During the period between now and flotation it is likely that the profits will make a great contribution towards what the taxpayer will get for his asset.

Mr. Tim Eggar: In view of the widespread wish that there should not be a capital reconstruction, a wish that encompasses almost all hon. Members, will my right hon. Friend urge the management of BA to sell assets, in particular aircraft? If it were to sell aircraft, does he expect any opposition to moving to Gatwick some of the routes that currently operate from Heathrow?

Mr. Ridley: As my hon. Friend said, it would help the problem of the balance sheet if BA were to sell assets, provided that it sold them at a price higher than their present book value in the balance sheet. I am sure that it will not have passed BA's notice that my hon. Friend has suggested a way in which it could help itself to avoid a capital reconstruction. As he said, the whole House would prefer it if a capital reconstruction could be avoided. I cannot at this time give a firm assurance on that point, however.

Mr. Michael Grylls: Is my right hon. Friend aware that the best thing that he could do would be to let the airline get on with the job of trading its way out of its deficit by earning good profits and that perhaps the worst thing that he could do, if he wants a successful flotation, would be to carve up the bird on the way to the feast?

Mr. Ridley: I have no carving knife and I do not intend to take one. The fact that I have left, and will leave, BA free to get on with earning good profits must be self-evident by now. My hon. Friend will have heard many hon. Members endorse my view that it would be best if BA could itself deal with its own balance sheet problems.

Mr. Anthony Steen: I welcome my right hon. Friend's statement. Will he ensure that, until 1985,

BA does not use its public funds to undermine and squeeze out existing British private airlines? Will he make sure that BA does not continue to peg its prices on its domestic routes at a disadvantage to private airline business?

Mr. Ridley: Even at present, whether in the private or public sectors, the CAA's control of fares should enable that authority to prevent an airline from charging unrealistically low prices to defeat competition. BA could be doing that now in the public sector. I am not saying that it is; it most certainly is not. However, the powers are there should any airline seek to do that sort of thing.

Mr. Den Dover: Is my right hon. Friend really satisfied that no review of domestic routes is needed? How long does he expect the review of overseas routes to take?

Mr. Ridley: As I said, I cannot put a time limit on the review that the CAA will be undertaking, but I shall urge it do it as quickly as possible. There can be no doubt that in the course of that review many aspects of the domestic scene will also be reviewed. The review is primarily directed towards overseas, not domestic, routes.

Mr. Prescott: The Secretary of State has recognised the determined co-operation by the labour force in turning round the company, resulting in 20,000 people being made redundant. That factor requires the right hon. Gentleman to have further discussions about the future of the railways — [Interruption.] — of the airline. May we have an assurance that he will be discussing that policy with the trade union movement?
As the Minister has said that the CAA is to review policy in the industry, and given the possibility that it may designate routes for another carrier, thereby reducing the size of British Airways, will he reconsider the policy of conducting a complete review because airport policy, as the Minister has informed the House, will be considered by him and not by the CAA?

Mr. Ridley: I have just met the railway trade unions. I would not have mentioned that point, but the hon. Gentleman asked for the information. I mentioned it to show that if any trade unions want to discuss such matters with me, my door will be open. So far, I have not received any requests.
I shall just slightly correct the hon. Gentleman on one point. I am not sayng that the review by the CAA of route policy will in any sense be directed at any one route or result in routes being changed from one airline to another. The review is of policy, not of any particular application or route. I cannot forecast what policy changes the CAA might suggest.
I am not making a statement about airport policy today. I should like to consider the many factors in this complicated picture before saying anything further.

Statutory Instruments, &c.

Mr. Speaker: By leave of the House, I shall put together the Questions on the seven motions relating to statutory instruments.

Ordered,
That the draft British Waterways Board (Limit for Borrowing) Order 1983 be referred to a Standing Committee on Statutory Instruments, &amp;c.7
That the draft Eurocontrol (Immunities and Privileges) (Amendment) Order 1983 be referred to a Standing Committee on Statutory Instruments, &amp;c.


That the draft Statutory Sick Pay Up-rating (No. 2) Order 1983 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs and Excise Duties (Personal Reliefs for Goods Permanently Imported) Order 1983 (S.I., 1983, No. 1828) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs and Excise Duties (Personal Reliefs for Goods Temporarily Imported) Order 1983 (S.I., 1983, No. 1829) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Employment Protection (Variation of Limits) Order 1983 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs Duties (ECSC) (Amendment No. 3) Order 1983 (S.I., 1983, No. 1782) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Major.]

Motor Industry

Mr. Roger King: I beg to move,
That this House acknowledges the important contribution to the economy of the motor industry; congratulates the car industry on its improved performance; acknowledges Government support; and calls on the Government in the development of its policies to give continued encouragement to the industry.
This is a welcome opportunity for the House to discuss the prospects and current position of the British motor industry, which is an important industry for this country. It is vast and employs a large number of people. Some would say that it is our biggest industry. This year has been an especially good year for the British car industry. So far sales look like touching an all-time high of about 1·79 million cars. We have seen the resuscitated organisation of BL Ltd.—which has taken in the Jaguar car company and is proving to be one of our most formidable exporters of cars, principally to the United States — and the Austin-Rover group into which so much taxpayers' money has been placed during the past four or five years. With its increased market share of just under 20 per cent., BL is beginning to deliver those much-promised goods.
The gross value of the industry to the British economy, including commercial vehicles, cars and components, amounts to about £8 billion in 1982 terms. However, in 1981 the total turnover for the entire motor trade, covering retailers, distributors, wholesalers, stockists and all those in allied industries, was nearly £28 billion. By any standards, the car industry is a very large one.
The car industry is a vital sector of our community in terms of the number employed. No exact figures will be available until the second quarter of 1984 because, surprisingly, no one has ever kept any. It is estimated that there are about 360,000 people in manufacturing with about 200,000 more involved in the allied industries on the retail and servicing side. That represents a significant decline, because the motor industry has borne much of the brunt of the recession. In 1973, car production was 1·7 million units. In 1982, it had declined to 880,000 units —a 49 per cent. decline. I am happy that that figure is beginning to climb back again. In 1973, 600,000 people were engaged in the manufacturing side of the industry. In essence, during the past 10 or so years, the industry has lost nearly a quarter of a million jobs. This year our balance of trade — which was in a positive state throughout those years—will show a record £2·3 billion deficit. Although matters are looking more encouraging at the moment, there is a great deal to be done.
What has happened to the British motor industry during the past 10 or so years? What lessons can we learn from that? In the good old 1950s, anyone could sell anything, and the motor industry was no exception. A person had to be put on a waiting list for six months before the car of his choice was available, and really there was no choice. The car came with black paint and red upholstery, and that was that.
The Government implemented stop-go policies. The booming car industry was used as a tax regulator when inflation rates started to increase. In every sector, when manufacturers were ready to install new plant and equipment, the screws were put on in the form of taxation, and management cut back on its investment. Although we may have had competitive products—the Mini was a


classic example of what happened during the late 1950s; it was a world leader in its manufacturing ingenuity and virtually every car manufacturer in the world has since copied it—the quality of the product left much to be desired. This country is known for its designers, but in the 1950s and 1960s we could not put cars together with the quality that was demanded by the customer. Add to that poor productivity, soft management and demanding unions, and we had a recipe for price increases and growing inefficiency in the industry.
One of the most cataclysmically disastrous policies was then implemented by the Government — factory dispersal. That sprang from the desire to bring employment to the so-called development areas and necessitated the removal of many of the car factories from the west midlands to the north-west, Scotland and elsewhere. Satellite plants with conveyer belt lines 300 to 400 miles long were introduced. That is a handicap that was never inflicted on any overseas manufacturer.
Heavy motor taxation was imposed by successive Governments, so that today the motorist is paying about £10 billion in taxation to the Exchequer. The car industry has been used as a milch cow because, seemingly, it has not experienced any retardation in growth. Governments of all persuasions have repeatedly taxed the industry.
The problems faced by the industry when we were deciding whether Britain was entering or staying out of the Common Market led many of the multinational companies to decide for themselves that they were going into Europe. Investment in plant by the Ford Motor Company Ltd., General Motors and other manufacturers has gone to the mainland of Europe, to the detriment of indigenous British industry. The white hot technology of the late 1960s resulted in the forced arranged marriages of what was the independent British motor industry. The industry had to be big to be beautiful, and it had to be big to be competitive. However, the evidence shows that the most competitive manufacturers in the world are the small units, such as Honda, BMW and Mercedes. There was no money in the British market for new models and new plant so the multinationals invested elsewhere.
The problems of the industry culminated in the mid-1970s with the BL rescue plan, when the Government pledged large sums of money to enable the industry to pull itself around, to invest in new models, plant and equipment and to make one last desperate effort to be a successful industry once again.
Given the level of investment, we have seen how sensible it was for both Labour and Conservative Governments to maintain a strong, solid investment in what was left of the British motor industry.
In my constituency we make the Austin Metro, which had the benefit of Government investment of about £500 million in a brand new automated plant. That is a great deal of taxpayers' money but within three years, when we hope that the millionth Austin Metro will come off the assembly line, the Government will have received, assuming that many of the Metros are exported, about £262 million in sales tax from Austin Metro production. It will have saved about £260 million in unemployment benefit, bearing in mind the scale of unemployment that might have occurred if the old British Leyland company had gone bankrupt. When comparisons are made with the shipbuilding industry, the coal industry and the aviation

industry, it can be seen that money invested in the motor industry will produce a return, unlike many other organisations.
According to the Investors Chronicle, about 4,000 companies in the west midlands depend upon a successful and viable British Leyland. Despite all the hoo-ha about the so-called microchip factories with the brand new jobs for tomorrow—it must be accepted that they are vital—it has been estimated that in the past 10 years, in a world of computers, water supply, petroleum, natural gas, radio, radar and electronic goods, many elements of which have been in growth sectors, they have created no more than 84,000 new jobs. The message must surely be that we pursue our policy of encouraging the British motor industry to develop its factories, model range and employment prospects.
I have already said that BL is one of Britain's great success stories. It will make a positive contribution of about £700 million to our balance of payments this year. That is vital when we bear in mind that the industry as a whole is still about £2·3 billion in deficit. It has the right cars, or soon will have when it achieves a complete model range, at the right price and of the right quality. The work force is as productive as any other in the world, thanks to the investment that has been put into plant and machinery. The result has been increased demand within the United Kingdom and in many overseas markets. Jaguar is a classic example of how a company, which failed to modernise and failed to put its products together properly, has grasped the nettle. It now produces cars for which there is a never-ending waiting list throughout the world.
Good though our achievements have been to date, we must recognise that many of our competitors on the continent are in considerable difficulties. Volkswagen, Renault and Peugeot-Talbot-PSA are all making losses. In Europe there is 30 per cent. over-capacity in car production. The European industry can produce about 13 million vehicles a year, and this year it will have produced about 10 million. It is nowhere near its ultimate capacity. All the companies within the European industry receive varying degrees of company support. That support does not happen just once in a while. For Renault, for example, it is continuing support.
Germany and France are blessed with the opportunity to sell about 2 million or more cars a year. Germany has a population that is roughly the same as ours but it has a market of about 2·2 million car units a year. German manufacturing companies will produce 3 million cars, which means that nearly 1 million vehicles will be exported from Germany. The United Kingdom's ultimate market is about 1·79 million units, which we hope will be achieved by the end of the year. However, our own factories will produce no more than 600,000 units. We shall produce more units but they will take the form of branded imports. These are the so-called tied imports, the cars that come in from Ford and General Motors overseas. In many people's eyes, they are United Kingdom products and are sold as such. Some of them contain some United Kingdom components but the majority do not.
We must increase our United Kingdom sales market beyond the 2 million mark if we are to achieve the economies of scale that are necessary for our United Kingdom car manufacturers and component suppliers. The suppliers are having to make the same components as are produced by the German, French, Italian and Japanese


industries but at a higher unit cost because they do not receive the necessary orders from the United Kingdom car industry.
The recent relaxation of hire purchase terms has proved singularly beneficial to the motor industry. It pushed sales up this year by about 400,000 units. At the same time, it enabled our manufacturers to improve their market share. In the period ending May 1983, the total United Kingdom market was 17 per cent. higher than it was for the first five months of 1982. The British share of the market was more than 1 per cent. higher at 43·4 per cent. as a direct result of the relaxation of hire purchase controls.
The motor industry believes that the effect of substantial direct car taxation should be examined. If we were to eliminate the 10 per cent. special car tax, the benefits would be substantial. As late as May 1983, my right hon. Friend the Secretary of State for the Environment, who was then the Secretary of State for Industry, was quoted as saying:
The car tax will be kept under review; we do not regard it as part of the permanent furniture of Government; we will gauge its impact and we will listen to any evidence that the industry places before us.
The evidence is pretty substantial. By abolishing the special car tax, the Government would lose about £600 million in revenue each year. However, within three years sales could be expected to rise to 2 million and the £600 million would be returned to the Government. It has been estimated that if there were about 2 million registrations of new cars each year for the next few years, the Chancellor of the Exchequer would be better off by about £1 billion by 1990 at 1982 prices. This appears to be a first-rate bargain, and if the Government choose to reduce their yield from taxation by about £600 million a year they will be paid several times over.
The knock-on effect for component suppliers would similarly be substantial. If the United Kingdom market can be increased to 2 million units and if United Kingdom manufacturers obtain a greater share of the increased market than overseas competitors, it has been estimated that many new jobs will be created in the steel industry and in the components sector. I am not in the business of estimating how many new jobs will be created. Opinions differ, but the estimates range from about 50,000 to about 100,000. However, it is certain that new jobs would result, and that, too, is a factor that must be taken into account as it means that the Government would not have to pay out the same amount of unemployment benefit.
We need to encourage the tied importers of cars to produce more of the components in the United Kingdom. It is no good implementing investment plans by building semi-automatic engine plants and gearbox factories. I acknowledge that that sort of investment will keep some people in employment but the real opportunities for work are in the supplying sector. I have in mind the companies that produce sheet panels and all the infrastructure that is put inside a car—such as dashboard and seats.
Ford is a net importer of cars into Britain. More and more of the products that are sold in the United Kingdom market come from its overseas factories but I admit that sometimes they have Bridgend engines. Recently we have heard about the company's large investment in Dagenham in respect of the diesel engine development for passenger cars. That investment is to be applauded but we must not lose our capacity to manufacture cars in Britain and to export them.
I believe that an expanded United Kingdom market will stimulate many multinational companies to think again about sourcing their components in this country. General Motors—Vauxhall—is thinking about that.

Mr. Anthony Beaumont-Dark: There is a danger that Nissan is likely to want to build a motor plant in the United Kingdom, and that it will be—to be blunt—a Meccano outfit that will cost many thousand jobs in the Midlands. Unless we can stipulate 80 per cent. home-produced components, that development should be resisted.

Mr. King: My hon. Friend has pre-empted what I was about to say. He has stolen my thunder, but I could not agree with him more.
Abolishing the car tax will probably cost the Government £600 million but, given that we spend £1·3 billion on regional aid, secular aid for a particular industry is money well spent. If the Government told the motor industry that they would think again about the 10 per cent. special car tax, they would find the industry ready and willing to discuss jobs and investment in car assembly and in components.
The industry's problems are many and varied. There are the European bureaucrats and their exhaust emission controls, and there are distribution problems and so on. No doubt some of my colleagues will refer to those points. I wish, with some vehemence, to draw attention to two further problems.
First, there is the Nissan development in this country. It has been likened to a Trojan horse. The development needs to be considered very closely. The Guardian on Saturday made headline news of the fact that Nissan was furtively engaged in negotiations with the Government over the Austin-Rover factory at Longbridge in my constituency. According to the report, Nissan wished to purchase the factory and produce its own range of cars there.
The incomes of 13,500 of my constituents depend on the development of that factory. That sort of scaremongering does their hearts and minds no good at all. They are told that they could wake up one morning and find themselves obliged to do press-ups and physical jerks before starting to bolt the vehicles together. I am happy to be assured by Austin-Rover, the Government and Nissan that Nissan has no intention of involving itself with Austin-Rover at Longbridge.
Austin-Rover is working nicely with Honda, in the manner in which we want such things to be done. We do not want forced marriages; we want arrangements between various companies throughout the world, and a cross-fertilisation of ideas on suspensions, engines and transmissions. That is the way forward. The example of the Triumph Acclaim shows how that cross-fertilisation can work. In 18 months' time there will be the development of the BL-Honda luxury executive car to replace the Rover range. That will be the first real evidence of joint design leadership and production know-how. It may be said that British Leyland is exactly the same as Nissan—that BL is assembling the Triumph Acclaim in this country. However, the company's policy is to improve the United Kingdom content of that vehicle, and within the next three or four months something very similar will be produced at Longbridge which, one hopes,


will contain many more United Kingdom components. Evolution is taking place, and evolution is always more cost-effective and more useful than a forced marriage.
Let us privatise by all means. I have no desire for the company to remain attached to the state. However, when the time comes, the work force should be given a slice of the action. They should become investors in the project. A worker who owns part of the business will be much more diligent.
How many cars does Nissan plan to build in this country—200,000, 250,000 or as little as 50,000? We have heard all those figures. What is certain is that the local content of the car—out of the total value of the car, including labour and all the metal and goods inside the car — must hover at about 80 per cent. as a percentage of ex-works value. Only that percentage will balance the employment loss caused by competition from Nissan United Kingdom, and it will do so only if one-third of the projected output is exported.
Let us not fall into a trap. We could bribe a Japanese car manufacturer to set up in a development area where jobs are needed and give that company several hundred million pounds, only to find that no more than 5,000 or 6,000 new jobs are produced, and a handful in the component industry, and that Nissan's market share in this country is taken from British Leyland, Ford and General Motors and, in addition, that those companies are not ordering so many components made in the United Kingdom. If that were to happen, there would be a decline in job opportunities in the industry and in the number of companies supplying the industry.
Nissan may be a Trojan horse which will finish off the industry just as it was beginning to flower once again. I would welcome a strong assurance that we will not accept anything less than a 90 per cent. British content and that the Nissan factory should produce at least 150,000 cars, with a guarantee that 50,000 will be exported.
Spanish imports represent a grave injustice. The question of Spain's entry into the European Community awaits the travail of time. 1986 has been suggested but it may be, after the Athens summit, that the date of Spain's entry will be 1987 or 1988. We need to renegotiate our arrangements with Spain for the import and export of cars. At the moment, British Leyland Austin-Rover is entitled to export to Spain at a reduced import tariff of 19 per cent. 970 Metros between 1 litre and 1,300 cc and 1,000 other vehicles. In the all-important market sector of vehicles under 1,000 cc—particularly satisfactory in the Spanish market—we can send only at an import duty rate of 37 per cent. However, Spain can send an estimated 50,000 or 55,000 Vauxhall Novas to us this year at 4·4 per cent. import duty. That is entirely unsatisfactory.
We imported about £777 million of goods from Spain this year, and exported £865 million of goods to Spain. To the uninitiated, that is a positive balance of trade. However, in 1982 3·7 million British tourists went to Spain, giving Spain an income of £705 million. We obtained only £80 million from Spanish tourists. We are, therefore, in deficit with Spain to the tune of £537 million. That is an untenable and indefensible situation. Longbridge is ready to produce the required number of Austin Metros for that market. That car is ideally suited to that market. We are prepared to negotiate a satisfactory

figure. Austin-Rover would probably settle on 10,000 cars per year as being satisfactory. The distribution set-up would probably not handle more.

Mr. David Madel: My hon. Friend mentioned the Vauxhall Nova. I agree that there are some difficulties over Spanish imports. He should remember that that car has completed Vauxhall's range in this country and is very much a European car. It includes bits from continental Europe as well as this country. Although the Spanish Government may be difficult, we benefit from having the Nova brought in because it underwrites a number of Vauxhall jobs.

Mr. King: I am grateful to my hon. Friend. I have no wish to stop Vauxhall importing as many Novas as it wants. I am in favour of free and fair trading, but the emphasis must be on "fair". In the future the British motor industry work force might find itself on short time because of a decline in sales demand, and therefore we want the opportunity to export a fair number of vehicles to Spain. We do not ask to send 50,000. I suggest that about 10,000 would give us a fair crack of the whip. Vauxhall has risen like a phoenix out of the ashes. It has developed into a strong company again, and I have a great regard for its vehicles. The company needs to be encouraged, and if that means bringing in cars from factories overseas, that is fine.
This country needs a strong motor industry. The commercial vehicle industry is in recession at the moment, but last month there were signs of an upturn in commercial vehicle sales. Perhaps the worst there is over. As the country pulls out of recession, operators and manufacturers will start to purchase new vehicles. A strong motor industry is essential for our balance of payments. According to the best estimates, oil revenues will start to decline in 1986 and by the early 1990s North sea oil will not contribute to our balance of payments. During that time we need to have resuscitated and completed the restoration of our car industry. It can perform well, and provide us with wealth and jobs. We must treat it carefully and fairly. It is robust and ready to fight for markets, but it needs our support and encouragement. That is why I commend the sentiments of the motion to the House.

Mr. Bryan Gould: I should like to congratulate the hon. Member for Birmingham, Northfield (Mr. King) on initiating this debate. It was agreeable to Opposition Members to hear such a hymn of praise to public investment in the motor industry.
A little under two years ago, I visited a large Nissan car factory just north of Tokyo, where I was able to study a modern manufacturing miracle at first hand. The Japanese car industry did not exist 25 years ago, but since then it has become the world's largest car manufacturer.
As Japan's fortunes have risen, this country has been sitting on the other end of the see-saw and our industry has been in decline. The hon. Gentleman told us how badly we have done since 1972, which was the peak year for output in the passenger car industry.
Since 1972, despite this year's welcome upturn, we have lost nearly one-half of our total output, and there has been a fall in employment commensurate with that loss. We have lost a huge proportion of our market share, at times approaching 60 per cent. of the domestic market.
The components industry, for perfectly rational economic reasons, has followed the car industry's


fortunes. Firms such as Lucas and GKN have closed their British capacity to move their operations to new plants on the continent. We all know of Dunlop's recent, shameful history. We know, as the hon. Gentleman said, that whereas at one time the car industry was a major earner of foreign exchange, the picture is now different. A deficit of £2·3 billion reflects the fact that the cars we export are barely one-quarter of the value of the cars we import.

Mr. Beaumont-Dark: I am sure that the hon. Gentleman wishes to be fair, and I may have misunderstood his emphasis on firms such as GKN and others which have gone to the continent and America. Does he agree that they did that not to remove capacity from this country but to ensure that they could compete? Conditions were often better in America and Europe than here.

Mr. Gould: I am glad to agree with the hon. Gentleman. If he had listened a little more carefully, he would recall that I prefaced my remarks about the components industry by saying that it had moved its operations for perfectly rational economic reasons, to take advantage of the much bigger car industries developing on the continent—as the British industry declined—and to take advantage of a generally more favourable manufacturing climate.
I was dealing with our external trade performance in the passenger car industry. I regret that the impression has gained ground in this country, assiduously promoted by some people, that we suffer particularly at the hands of the Japanese.
We know that the Japanese are not doing the major damage to the British car industry. EC car industries have secured the greatest penetration of our market. At present they have over 40 per cent. of the domestic market. No doubt the Japanese could do better than their current 11 per cent., but it is the EC that is ripping the heart out of the British industry. One telling fact illustrates precisely what has happened since we joined the EC. When we joined, we could sell it eight cars for every five that we imported. At present, believe it or not, we can sell it only one car for every 10 that we import. That is a staggering turnaround in such a relatively short time.
Although the EC is damaging our domestic car industry, it is Japan that is rightly and understandably so often held up as the model of a modern car industry. People visit Japan. The Prime Minister did so fairly recently. Many of them, including the Prime Minster, return with what can only be regarded as rather simpleminded explanations of why the Japanese have been so successful. The usual explanation offered is that the Japanese work hard and are free from industrial relations problems. That may well be true, but who can marvel at the differing industrial relations records in the Japanese and British car industries when one considers the Japanese car worker's experience over the past 30 years? He has had the unbroken experience of rising wages, rapidly rising living standards, total security of employment and participation in an industry which is universally regarded as successful. The British car worker has had an almost completely contrary experience.
The British car worker has had problems hanging on to his job and he has been constantly under pressure as real wages, compared to the rest of the wages structure in this country, have been driven down, and he is almost

universally reviled as workshy and strike-prone. The real reasons for the Japaneses success lie elsewhere. They do not lie in the differing industrial relations records which are a consequence rather than a cause of the differing performance of the two industries. The reasons lie in things such as a stable expanding domestic market upon which manufacturers can plan long term. They had a protected market when their nascent industry needed that protection. Another factor has been close co-operation and trust between Government and industry which has been reflected in the availability of long-term and practical finance to the Japanese industry. That should be contrasted with ridiculous monetarist policies in Britain.
The Japanese industry has been given plentiful, long— term and cheap finance. Japanese interest rates have traditionally been low. The result of such sensible economic policy is that the Japanese yen has been maintained at a highly competitive level. The Japanese do not share our ridiculous preoccupation with currency as a national virility symbol. They could not give a damn whether the yen is an international currency of any standing. When one considers Japan's immense participation in world trade, it is salutary to remember that only 3 per cent. of world trade transactions are carried out in yen.
As a result of the sensible macroeconomic policies that I have described, which are designed to create a favourable climate for manufacturing industry and to promote competitiveness and profitability, the Japanese have the money necessary to develop new green field sites, to install the latest technology, to pay high wages which lubricate industrial relations and to buy the best talent available. It is little wonder that they have been so successful.
Britain's experience has been quite the reverse. We have had no stability in the domestic market. Purchase tax constantly went up and down, and when its use as a regulator was finally abolished we had the special car tax. When the Japanese were protecting their domestic industry, we, in a state of weakness, were dismantling our protection and opening up our market to countries in and on the fringe of the EC. In Britain, industry and Government have often been at loggerheads. They certainly do not work together or trust each other. We have not had expansion as a result of cheap money or low interest rates, but rather contraction, deflation and a monetarist ratchet which has squeezed the economy and demand and forced up interest rates. That has made investment almost impossible. Furthermore, it has forced up the value of the pound to a ridiculous level.
The hon. Member for Northfield mentioned the welcome success of Jaguar. How big a factor in that success has been the 40 per cent. fall of the pound against the dollar? It just happens that Jaguar's principal market is the United States. I cannot think of any business man or salesman whose job would not be a little easier if the price of goods he was trying to sell was reduced by 40 per cent.
That catalogue of mistakes which have been pursued most by the Government, though they are not the only ones, have produced a much weaker and smaller industry than Britain must have. The picture is even worse than that revealed by the stark facts and figures. The industry would be revealed to be in a far more parlous state if it were not for political pressures on importers who would otherwise be able to take over the British market. The Japanese could close the British car industry tomorrow. They have not


done so because they know that the result would be tremendous political uproar. The British car market is artificial. Everyone has some interest in maintaining its artificially high prices. If we were to have a truly competitive market, the British car industry's plight would be even worse than it now is.
I have in my constituency a major multinational car manufacturer—Ford. I pay tribute to it. I am not one of those who argue that the problems of British industry, especially the car industry, are a result of wicked policies pursued by multinationals. We are lucky that some parts of our car industry are in the hands of multinationals which have greater resources and are therefore more able to resist short-term market forces. If it were not for that resilience, Ford and many other manufacturers would have upped and gone a long time ago. The multinationals cannot be patient for ever.
Ford of Europe gave an important warning to the Civil Service and Treasury Select Committee which examined international monetary arrangements in the previous Session. I am glad to see that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), who was a member of that Committee, is present. He will recall that Ford gave evidence to the effect that its problems, when considering future investment in Britain and sourcing policy for the British market, were directly and severely affected by the Government's macroeconomic policies. It made it clear that the pursuit of high interest rates and an over-valued exchange rate put a serious question mark over its willingness and ability to remain as a major manufacturer in Britain.
It would be disastrous if a major manufacturer such as Ford were forced to withdraw its manufacturing from Britain. I shudder to say it, but that is emerging as a long-term possibility. If Ford is forced to make such a decision, I fear for the rest of the British car manufacturing industry. I have pleasure in agreeing with the hon. Member for Northfield that we cannot afford the balance of payments loss, the employment loss and the loss to industry as a whole associated with a car industry which is failing to pay its way and expand. Worst of all, my constituents could not afford it. For that reason, if for no other, I shall continue to urge a change of policy, as that alone will guarantee the future of the car industry. Only a change in the manufacturing climate can guarantee the future that the hon. Member for Northfield and I want.

Sir Dudley Smith: Although I agreed with some of what the hon. Member for Dagenham (Mr. Gould) said, I am not sure about his diagnosis of the Japanese problem. I should have thought that British workers were under more pressure than their Japanese counterparts during the period that the hon. Gentleman mentioned because the British product was less attractive and of poorer quality. The result was the erosion of the British market by foreign competitors, especially the Japanese. Although financial considerations gave the Japanese an advantage, they vigorously achieved penetration of the British market. It will take a long time to regain the share of the market that we lost then.
I should like to congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. King) on the way in which he moved this relevant motion. It gives the

House an opportunity, albeit brief, to discuss the British car industry. His admirable summary of the past 30 years was right on the ball. I am sure that few people who have studied the subject will disagree with many of his conclusions. He was right to draw attention to the overcapacity which can be found on the continent. Some of our European neighbours are building up a great deal of financial trouble. Putting our house in order will probably pay off in the longer term.
I have always felt that we set too much store on the industry as an economic barometer. Ten or 15 years ago, when anything happened in the car industry there was a momentary pause and the Government's heart missed a beat. Although the car industry is still extremely important, it is perhaps no longer the most important factor in our economy.
I congratulate management and workers in the car industry on what has been achieved recently. Having almost touched rock bottom, the industry has modernised and reformed itself. Today, with a much smaller work force, it is making more reliable cars than before and becoming much more competitive with foreign products, which bit so deeply into its market. It has shown a refreshing sense of realism.
The arrogance that was shown in the 1950s and early 1960s by car manufacturers, when it was a "privilege" for the individual to part with several hundred pounds rather than the thousands of pounds nowadays to buy a product, and the scant attention paid by the retailer and the wholesaler were a disgrace. I am glad that those days are gone. There is a sense of marketing realism today which, I am pleased to say, compares favourably with that of some of the other more successful industries.
Intermittently, right back to the times of the Macmillan Government, it has been said that we need to "Buy British" and that as a country we should endeavour to buy British products. The time has come again when we need to instil into the people, as our economic recovery gets under way, the need for them to play a part. Many of our constituents and fellow citizens constantly criticise the Government, the work force and the whole of British industry without ever looking into their own hearts and deciding that they, too, can contribute by buying British products and helping to back the home market. When I go to foreign countries, I am amazed, as I am sure all hon. Members are, to see the preponderance of home-produced cars in the streets, despite the excellence of the foreign competition. That is largely because of the pride of the nationals who live in those countries and because they are nationalistic in their outlook. A little more pride and a more nationalistic attitude by us would not go amiss. If that happened, it would be a considerable contribution to the sales of the British car market.
Here we see far more foreign cars than in any comparable city on the continent. There is no excuse for that. Ten years ago we lacked in quality, service and the way in which the products were turned out. Today that does not happen. There is excellence, and it is improving all the time.
I am glad that reference was made to Jaguar Cars. I see that the hon. Member for Coventry, North-West (Mr. Robinson), the former managing director of Jaguar, is present. With respect to the hon. Gentleman, it has improved a great deal since his time. I am proud that the


current managing director of Jaguar is a constituent of mine. Many of my constituents work at Jaguar in Coventry.
I do not agree with the hon. Member for Dagenham that one of the main reasons for Jaguar's success is the favourable financial balance with regard to America. The main reason why Jaguar has succeeded is that it has first-class management and a work force that at last has cooperated with the management, and which has been slimmed down and become more efficient. The product is incomparably better than anything that Jaguar produced in years gone by.

Mr. Geoffrey Robinson: Will the hon. Gentleman, who has made such a personal and direct criticism, inform the House whether last year and this year, under what he terms a better management, Jaguar, with all the advantages of the American exchange rate and a much more buoyant home and overseas market than when I was chief executive, produced as many cars as it produced when I was chief executive and made as much profit in real terms and whether the warranty claims per vehicle have been reduced? If the hon. Gentleman can do that, he may be entitled to make criticisms that otherwise I would ask him to withdraw.

Sir Dudley Smith: I am not certain of the exact figures. However, by general consent, Jaguar has improved a great deal. I know dozens of people who, in years gone by, bought Jaguars but gave up buying them because they were always going wrong. Today they are proud to own one and believe that it is one of the best pieces of machinery on our or any other roads.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): The answer to the question by the hon. Member for Coventry, North-West (Mr. Robinson) is that Jaguar produces slightly fewer cars than it did when he was in charge, but this year it will sell more.

Sir Dudley Smith: Exactly. I am glad that my hon. Friend the Minister came to my aid. He is more likely to have the figures than I am. He put his finger on it. It is a question not just of production but of reliability. We all know the state that the company was in just after the time when the hon. Member for Coventry, North-West was managing director. I am not accusing him, but I am saying that the British car industry was in a mess in those days. Today it is more efficient.
I do not want to spend too much time commenting on Jaguar, good as it is. It is important that every encouragement should be given to the British car market. I hope that if the British people respond in the next few years there will be a quid pro quo with regard to the component parts of cars.
The area that I represent is much concerned with the car industry, though chiefly with producing the various components for cars of all types, foreign as well as British. It is sad when we hear that some leading British manufacturers obtain many components from abroad. We must do more to encourage home products. If they are supported, they should support also the vital ancillary industries. My hon. Friend the Member for Northfield mentioned them in his speech. Again, we need to buy British. I would never suggest that people should not be competitive and should go for an overpriced product, but

many of our products are equally competitive with those from abroad, and manufacturers should make a special effort to get British components. That is an integral and important part of the scene. If the British car industry succeeds, the components industry should succeed.
There will be a contracted industry in future. Inevitably, it will remain smaller than it was in the time referred to by the hon. Member for Dagenham. The industry can be successful and contribute to the national economy in the remaining years of the century. There is a new sense of realism from the point of view of both the management and the work force. Long may that continue. That is not merely because a chill wind of unemployment has been blowing throughout western Europe in the past four or five years but because it was realised that the British car industry was overstaffed and not run efficiently, and at last the industry has got round to putting its house in order. There is still some way to go, but, with luck, the industry will be able to take on the competition, whether it comes from Japan or the EC. It will co-operate with the EC. There are many multinational companies that produce on the continent as well as in this country. By doing so, they will still have an assured future.

Mr. George Park: I welcome the opportunity to debate the car industry. I thank the hon. Member for Birmingham, Northfield (Mr. King) for providing that opportunity.
In the House and outside it there is still a lack of awareness of the importance of the motor industry to Britain. That is shown by the sparsity of attendance in the Chamber. More recognition should be given to the fact that no manufacturing industry contributes more to the wealth of the nation than the motor industry. Directly or indirectly it employs over 1 million people. In congratulating the industry on its improved performance, we should not lose sight of the fact that the major strain created by that improvement has been taken by the work force, or, rather, those who were formerly part of the work force, because over 300,000 have lost their jobs in the past couple of years.
The motion seeks to call attention to the British motor industry, but the continuation of an independent United Kingdom motor industry rests almost wholly with British Leyland cars and Leyland vehicles, since none of the other British manufacturers can take decisions in isolation from the interests and strategies of their parent companies overseas. That limits the scope of United Kingdom managers to manage those companies decisively and to direct their business operations in the United Kingdom. On crunch decisions, they are always subject to meetings that take place hundreds or thousands of miles away.
As a core manufacturing industry, many other sectors depend on the motor industry for their livelihood. For that reason, I agree with the hon. Member for Northfield that an agreement with Nissan to produce vehicles in Britain must contain at the outset a strict condition calling for a high local content in the vehicles. If not, it will be a Trojan horse. If our component manufacturers are not even to be given the chance to tender for the bits and pieces that go into a vehicle — it does not matter whether they are efficient—we may gain some jobs from Nissan, but we would lose at least that number, and perhaps more, in component manufacture and in our assembly companies.
As it is, the three major multinational companies that operate in Britain no longer have the capacity in Britain to design and produce vehicles. They are confined to assembly operations, the manpower for which is reduced with the continuing introduction of robotics. Just as important, we lose the design capability and the manufacturing skill.
I have the gravest doubts about the validity of the motion's aim
to give continued encouragement to the industry.
The Government have been reluctant to develop an overall strategy for the industry and are still trying to disentangle themselves from all responsibilities for the motor industry. The cash support for British Leyland was small in relation to the needs of the company, when competitors were investing at record levels to introduce new models, which are the lifeblood of the industry. The investment was not sufficient, and we should compare it with the money invested by other European Governments in their companies, which enabled them to continue research and development.
To talk of privatising parts of BL as they become profitable takes no account of the cyclical nature of the sales of individual models. They do not all sell at the same rate at the same time and, therefore, if the Government select parts of BL to sell, they will lose a great part of the corporate strength that holds BL together. The Government should take account of that when they talk glibly about selling parts of BL.
The hon. Member for Northfield referred to a range of cars but, obviously, if some parts of the corporation are sold off—I shall not name any parts, because it might encourage people to identify the companies—there will be not a range of cars but some individual companies. I notice that there is even some talk that, when the companies are sold, the purchaser should be given the proceeds of the sale. That really is the "bun and the ha'penny", is it not, because one cannot escape the fact that the motor industry was in a mess under private ownership and was rescued only by the input of Government money.
If the Government wished, they could give considerable help to the industry. They could increase the market to more than 2 million units by removing the special car tax. Apart from motor cycles, cars are the only consumer durable that are expected to shoulder that imposition, which was introduced as a temporary measure in 1981. Of course, we all know what "temporary" means. It means that successive Ministers have decided that they cannot do without it, probably nudged on by the Chancellor of the Exchequer. However, on the evidence of the increase in sales as a result of the relaxation of hire purchase controls, if the special car tax were removed there would be an uplift in sales. Let us see whether we have confidence in the car industry to maintain and improve its share of that extra part of the market. I am confident that it could do so, and I hope that the car tax is abolished.
The Government effectively imposed a purchase tax of 26·5 per cent. on a British-built car, yet Britain imports videos and hi-fi equipment at only 15 per cent. tax. We also have the continuing Spanish onion; successive Ministers who have been asked about it have said "We cannot do anything about that because it would be against the treaty of Rome or against the general agreement on

tariffs and trade." Britain is about the only country that plays this game. During previous debates on the matter I said that Britain was still playing cricket while the other countries were playing karate. We are still doing it. All that I ask—it would not be an outright rejection of an agreement—is for the Government to say "If you want to put X per cent. tax on British vehicles that enter your country, that is your decision, but we shall have to put a similar tax on your vehicles." That cannot be discrimination. It is even-Steven and is fair to both sides. I urge the Minister who will reply to the debate—the plea comes from both sides of the House, and is not just a radical proposal from the Labour party to man the barricades—to take this point on board.
It is bad enough to have differential ratios, but something much worse is creeping in. The European Commission has introduced a draft bulk exemption regulation, which would force the European, not just the British, motor industries to harmonise prices. Yet all the member states will still have their own price controls, car taxes, and economic and fiscal policies. There will also still be exchange rate fluctuations. The regulation is a monstrosity that should not even be considered.
We must draw the Treasury's attention to the fact that 60 per cent. of car production goes in fleet sales. If the Treasury insists on continually increasing taxation on company cars, and regarding them as perks, it will no longer be viable to have a company car. It is like imposing a tax on a carpenter simply because he uses his tools to do some DIY at the weekend. A car is a tool of the trade and should be regarded as such. The Treasury should not continue to try to increase taxation.
When it comes to individual choice, as the hon. Member for Warwick and Leamington (Sir D. Smith) pointed out, that may not necessarily be exercised in favour of a British vehicle. Unfortunately, it is still not recognised, even inside the House, that for every seven cars that are imported we lose a job. I wish that people would bear that in mind when exercising their choice.
We must also recognise that vehicles need roads. The hon. Member for Northfield said that only a third of the £10 billion in tax was returned to the benefit of the road user in the form of road construction and maintenance. We in the west midlands have been trying to get a cross-country route through the black country for more than 30 years. That would take in a part of the west midlands that has been badly decimated, where once there were steelworks, and so on.
I urge the Government to have regard to all the derelict land that could be redeveloped to attract industry back into that area. If the Minister needs any convincing, he should try to journey across the black country to get to the M6. He will then see how necessary such a cross-country road is. Therefore, some of the money from car taxation could be used to give the west midlands a lift.
Various hon. Members will no doubt urge similar action on the Government. The industry has shown that it is capable of pulling itself up by its bootstraps. We now ask the Government to remove some of the restrictions that have been placed on the car industry over a number of years. As a result, the industry would blossom, provide more jobs and revenue and—particularly as its tentacles are spread throughout the country — benefit the whole economy.

Mr. Hal Miller: I respect and admire the knowledge of the motor industry shown by the hon. Member for Coventry, North-East (Mr. Park), as well as his forthright defence of the industry in the west midlands. However, his memory of the funding of the industry has become somewhat selective. Whether the Government wished to do so or not, they have funded BL to an even greater extent than the Labour Government did, although I accept that funding for research and development is not as great as the hon. Gentleman and I would wish.

Mr. Park: I said that the funding was not sufficient to meet the needs of the company at that time. I trust that the hon. Gentleman will agree. He knows that unless new models and face lifts are introduced, cars rapidly lose their sales appeal. It was only when BL was able to offer a range of models, in conjunction with a favourable exchange rate, that the industry began to lift off.

Mr. Miller: The hon. Gentleman knows that BL did not have the engineering resource to bring new models on stream any faster. It was not just a question of the finance. It was impossible to exert financial control until management control had been restored.
It is a pity that a debate on our largest employer, largest manufacturer and largest exporter second only to the oil industry has not attracted a greater attendance. We are not talking about a luxury industry. It is a vital motor of the economy and an essential part of our daily lives, especially when we consider that 93 per cent. of all passenger movements and 90 per cent. of all freight movements take place by road. Therefore, this is an essential industry that supplies an essential need.
I am grateful to my hon. Friend the Member for Birmingham, Northfield (Mr. King) for the terms in which he introduced the motion. He has done a service to the House. He recognised the industry's contribution to the economy and its improved performance, which should give the Government the confidence to take the futher measures that we believe are needed.
Doubt was expressed that the removal of the hire purchase restriction would let in a greater volume of imports, but performance shows that, for the first time for 10 years, the tide of imports has been stemmed, despite the emergence of the Nova on to the market. That stronger market has given confidence to the multinationals to produce a greater proportion of their sales in this country, Vauxhall being a notable example. I am sorry that the hon. Member for Dagenham (Mr. Gould) is no longer in his place, as I wished to take him up on this point.
Nowhere is the motor industry's contribution more important than in the west midlands. I know that my hon. Friend the Member for Northfield will forgive me if I refer specifically to BL, which now employs 100,000 people, 55,000 of whom work in the west midlands. As the hon. Member for Coventry, North-East said, the bad news is that the company lost 100,000 workers in five years because of its lack of competitiveness in terms of price, quality and delivery. The good news is that it has led the way in the adaptation of new technology —the Metro line—and last year recruited 2,000 additional workers. BL spends £2 billion every year with 6,000 United Kingdom suppliers and is now one of our top five exporters. The west midlands, more than any other region, has a unique dependence on manufacturing industry, and on the motor industry in particular.
I hope that the industry's improved performance and significance are welcome to the Government in view of the large tax take that it provides. There is a need to increase confidence in the industry and to provide for an increase in the market so that we can consolidate the gains that we have made. That will enable the industry to continue to supply the taxes that the Government presently enjoy.
There are threats on the horizon, especially in relation to capacity. At present, European car production stands at about 13 million, against sales of about 10 million. We have all seen the pressure on prices, through the discounts that are widely available. Those threats on the horizon are particular to the United Kingdom.
I know of the Minister's experience of the steel industry. Like that industry, the motor industry has already taken the measures that are necessary and has made sacrifices in both production and employment. For example, BL, with its 100,000 workers, has closed 20 factories and productive capacity has been reduced from 1·2 million units to 800,000 units. We strongly believe that the reduction in capacity has been our contribution to the reorganisation, and we look to the Government to ensure that we do not have to suffer additional contraction because EC Governments have not faced the overcapacity that exists among other European competitors.
The hon. Member for Coventry, North-East and my hon. Friend the Member for Northfield mentioned taxation on company cars. The importance of the company car market is shown by the fact that about 60 per cent. of sales are made to the fleet market. A recent survey carried out by the British Institute of Management, which was mentioned in "Heron Drive", estimated that about 2·5 million cars were owned by about 190,000 businesses. Of those businesses, 68 per cent. had more than 88 per cent. of British cars in their fleets. That shows the importance of the company car market to United Kingdom manufacturers.
Earlier I mentioned Vauxhall's increasing confidence. The introduction of additional shifts at an earlier date than expected is a reflection of Vauxhall's success in the company car market. That market is important and can help to increase not only employment and manufacture but investment in Britain. There is a proposal for an additional 15 per cent. tax, on the scale, from April 1984. However, the Government have not drawn any distinction between company cars as tools and as perks. There may be a valid case for taxing the perk and the private use of a company car, but at present that aim is not achieved. Therefore, if hope that consideration will again be given to an assessment being made by the Inland Revenue of the proportion of private as opposed to business use. That would be a much fairer and more realistic approach.
Commercial travellers have made representations about the 18,000-mile limit not being realistic for salesmen in urban areas and about the way in which their expenses are treated for tax purposes. The present tax is widely regarded as unfair. It is bitterly resented by many of those who would otherwise be the Government's strongest supporters. It is already having an effect that can be quantified. Smaller engines have been put into larger cars, such as the Sierra, Carlton and Ambassador, to try to get them within the 1800 cc band. That is having a bad effect on their export potential. In Europe, the break point for the same band is 2·8 litres.
A higher band car, such as a Rolls-Royce, is uniquely discriminated against because there are no other models in


its range. Most people, other than the most privileged, cannot afford a Rolls-Royce or a Jaguar, unless it is a company car. Very few retired people run around in such vehicles, because they cannot afford to service them. Larger cars are the most profitable for the companies. They are also the vehicles in which new technology represents a lower proportion of the final cost, so they are used as test beds. Such cars also represent the most solidly British part of company fleets. Therefore, I urge the Department and the Treasury to reconsider that point, bearing in mind the commitment of my hon. Friend the Minister to the privatisation of Jaguar. That company's sales will be severely affected if such discrimination continues.
The hon. Member for Coventry, North-East mentioned the threat of block exemption. Under article 85 of the treaty of Rome, selective franchise agreements are not permitted, and it is necessary to apply for an exemption. Firms have been applying for individual exemptions to protect their positions. In the motor industry, an exemption has been granted only to BMW. That was in 1974.
At the latest date, there were 3,715 agreements outstanding, upon which no ruling had yet been made. Indeed, only 29 agreements out of 169 applications per year have been granted in other industries.
A block exemption is obviously a sensible answer. The legal certainty that it should convey would be most welcome, but the Commission's proposals so far do not, regrettably, confer that certainty. The only certainty is that the agreements are likely to operate to the disadvantage of the motor industry not only in Britain but in other European manufacturing countries.
The 12 per cent. price criterion and the full model availability criterion are causing the trouble. The 12 per cent. price criterion has been ameliorated in the modifications introduced by the Commission in response to representations, in that the 12 per cent. differential will have to be the rule for more than six months before it becomes effective. Price controls imposed within 12 months will be ignored. However, the criterion still takes no account of the position in Belgium, where price controls have existed for years. The Belgian price will thus inevitably become the standard price throughout the EC.
As the Belgian market accounts for only 4 per cent. of sales, there has obviously been marginal pricing. Consequently, EC manufacturers will have to withdraw from that market. However, that will not prevent the Japanese and east European prices still being the reference prices throughout the other EC markets. The only result can be a reduction in both sales volume and profitability at a time when European manufacturers need to invest heavily in new technology in order to compete with the Japanese. Therefore, there is a real threat.
The alternative may be for the companies to take over the dealers, so that they can get out of that difficulty with the franchises. I cannot believe that the Government want a repetition of what happened with petrol companies owning the distributive outlets and all the anti-competitive measures to which that leads. However, I hope that my hon. Friend the Minister will be able to say something about that, because, from the manufacturers' point of view, the only other solution would be to take over the outlets.
I should like to make a passing reference to the Nissan problem. Views have been expressed about the local content that would be required. I am happy to say that I have ministerial written assurances that the content will start not below 60 per cent. and will rise to 80 per cent. A written assurance was given to me in a letter sent earlier this year. I should be grateful if my hon. Friend the Minister would confirm whether that is the Government's intention in the negotiations, regardless of the eventual scale of operation.
The industry is not a luxury; it is essential to the economy. It has made considerable improvements that have begun to bear fruit in the past year. We need to maintain confidence and investment in Britain's industry at a time of overcapacity in Europe and in the rest of the world. The realisation of the Government's aim to benefit by returning BL to the private sector is largely dependent on the measures that the Government take on the industry's behalf in resisting additional increases in company car taxation and the block exemption clauses of the EC.

Mr. Alan Williams: I congratulate the hon. Member for Birmingham, Northfield (Mr. King) on giving us the opportunity to debate the motor industry. I apologise to the Minister as I shall have to leave the Chamber before the end of the debate because of a clash of commitments. It is not meant as a discourtesy, as the Minister is aware after many years of sparring with me.
By tradition, in Britain we welcome inward investment. Many of our greatest and best employers are overseas companies. About 1,500 American businesses operate here. In Wales we have done well in employment terms from Japanese investment. I know from my negotiations with Hitachi and Toshiba that speculation during negotiations can be widely inaccurate and damaging because it often stimulates reactions, which are reported in Japan and lead to considerable misunderstanding.
I shall confine myself to making a couple of points about Nissan. The Opposition certainly welcome Nissan so long as its operation here means more net jobs in the car industry and that it will not be at the expense of existing firms. We welcome Nissan so long as there is maximum opportunity for British component manufacturers.
When Hitachi was thinking of coming to Britain as an independent operation we had two guarantees. It was agreed that over the first few years Hitachi would phase in the use of British components to a specified maximum level. A further guarantee, supported by industry in Japan, was that any sets that it sold within the United Kingdom would count against the ceiling that the British industry had negotiated with the Japanese industry for imports. We had twin guarantees. I realise that individual cases vary, but I hope that the Department will endeavour to obtain similar guarantees from Nissan.
The motor industry is critically essential to Britain's prosperity. About 11 per cent. of our manufacturing output is contingent on the health of the motor industry. The steel, rubber, glass and machine tool industries are involved and the ramifications are enormous. That is demonstrated by British Leyland, which alone has 700 suppliers involved in putting the final vehicle together.
The motor industry has had a disastrous three years. It is now enjoying a temporary remission, but it is facing a dangerous and uncertain future, made even more imponderable because only one of the four major


assemblers in Britain is British-owned. The policy decisions of the other three assemblers are taken outside the United Kingdom and interests other than ours are paramount.
It has been said correctly that one cannot separate the fortunes of the assemblers from the fortunes of the component makers. One might put that the other way round, since components make up about two-thirds of the final value of the product. One can, therefore, argue that the efficiency of the component manufacturers is doubly important to the health of the industry. It is imperative that, in our consideration of what has happened in the past few years and of what is likely to happen, we bear in mind the overwhelming need for economies of scale by the component manufacturers as well as by the assemblers.
A fuel-based industry was bound to be severely hit by the fuel price revolution of the 1970s. No mass market product was likely to escape a major world recession of that type, but I emphasise that world recession alone does not explain the crisis. I can demonstrate that by reminding the House of what has happened since the Labour Government left office.

Sir Peter Emery: A convenient reference point, of course.

Mr. Williams: Yes, a convenient reference point with no debating significance.
Since 1968, the last full year of the Labour Government, United Kingdom production has declined massively. Production was 25 per cent. down on the 1968 level in 1980. It remained 25 per cent. down in 1981 and in 1982. In those three years, under the present Administration, the equivalent of nine months of the 1978 production was lost. That was not because of disputes or industrial arguments but substantially because of industrial wreckers in Whitehall.
In the period that we lost 75 per cent. of the 1978 output West Germany lost only 23 per cent., France only 33 per cent. and Italy only 34 per cent. Japan's increase is not comparable, so it would not be valid or fair for me to make the comparison, but its production increased by over 20 per cent. in each of the three years. That was an abnormal phenomenon.
The world recession was not the cause of over half the lost production in those three years. It did not have the same impact on our major competitors in Europe. Far more devastating for the United Kingdom industry were the policies pursued by the United States-owned car companies in the United Kingdom and by this Government. The Government's policy was to push up inflation, which caused high interest rates, and the high rate of sterling made products uncompetitive.
Even now, with inflation back to the same level as it is in Germany, our interest rates are twice as high. Much of the damage that has been, and is being, suffered is a result of Government action. The effect is seen in the crumbling performance of the British car industry. Traditionally, we have exported between 30 per cent. and 40 per cent. of our output. Yet, in 1980 exports were 35 per cent. below the 1978 level, mainly because of the high price of sterling. In 1981 exports were 38 per cent. below the 1978 level and in 1982, 52 per cent. below.
At a time when our export sales were disintegrating, imports were rising. As the hon. Member for Northfield said, imports will reach a record level this year as a result

of the high value of sterling, which makes us uncompetitive, and as a result of the policy of Ford and Vauxhall to source production so massively abroad for sales within the United Kingdom. Most Vauxhall sales here today involve little more than assembly kits. Even the design teams are being taken from Britain, although Britain has been famed for years for the quality of its design.
Contrary to popular public opinion, nearly all the extra import penetration between 1975 and 1983 is not attributable to the Japanese. Japan's import penetration has been constant. Nearly all the extra import penetration from 1975 to 1983 has been the result of internal policy decisions of Ford and Vauxhall, leading to the tied imports that they have brought into this country. Even their so-called British cars have a higher import content than they did. In November, Vauxhall spoke of having reached 16 per cent. sales in the United Kingdom market, yet only 46 per cent. of the cars it sold were produced in the United Kingdom. Indeed, I received a letter from one of its factories this moring which claims that a small company of which General Motors is a shareholder is assembling Japanese Itzu vehicles, small vans, in Portugal, badging them as Bedford and selling them in the traditional Bedford markets.
It is small wonder that, while we have witnessed this enormous penetration of the British market by the European producer, we saw, by contrast, a British export penetration of the EC of less than 2 per cent. By 1982 we had a deficit on car production of £973 million and, as has been pointed out, this year we will have a deficit of more than £2 billion.

Mr. Madel: Does the right hon. Gentleman recognise that Vauxhall's position is changing rapidly? By the end of 1984, 65 per cent. of Vauxhall cars sold in the United Kingdom will be built in the United Kingdom. Should he not remember that Vauxhall sends a considerable amount of components and parts from this country to the German operation? It is a classic European car with each side being interdependent.

Mr. Williams: There may well be adjustments, but up to the present all the adjustments have tended to be in the wrong direction. What I have been trying to demonstrate and what I have been talking about is the predicament that the car industry has faced in the past few years. In so far as it has not been the responsibility of the Government, it has been the responsibility, particularly, of the two American car producers. But, in fairness to them, it roust be said that their action very often has been stimulated by what they have seen as the wrong-headed and harmful policies pursued by the Government.
The Government have blindly, destructively and doctrinally pursued their quack economic theories of monetarism, with the result that in 1981 alone 39,000 jobs were lost in the four major assembly firms. That is one third of the losses over the whole decade—eight times the losses suffered over the five years when the Labour Government were in office. Since the Government came to office, motor manufacturers have lost 110,000 jobs and the components industry has lost 150,000 jobs. At least 260,000 jobs have been lost as a result of the policies being pursued by the Government.
It is small wonder that the west midlands is littered with the empty shells of once prosperous factories. We shall no


doubt hear from the Minister that we are going through a period of recovery—1983, the year of recovery. Let us explore this return to health in a little more detail. What the Government are really saying is that, after four years of office, production is now slightly ahead of the level it stood at when they came to office because 1979 was, of course, the previous record year. They would want carefully to ignore the dead bodies scattered on the battlefield over the intervening four years. How has this recovery come about? Is it, at last, the success of monetarism that we have been promised is always hovering somewhere near the horizon? Not at all; if anything, the answer is the exact opposite.
The country has been led by a Prime Minister who has preached continually about the financial prudence of the housewife and about living within one's means. Yet this temporary upturn has been created by a hire purchase boom. We shall ignore the fact that it happened to coincide with a general election year. Consumer spending on cars has risen by 15 per cent. A recovery and an electoral victory, all on good old-fashioned "tick"—the immoral extravagance that the Prime Minister spent the previous four years warning the country against. One must give it to the Tories: they never forget a good electoral trick. This is not the first time that they have done it. They knew it would work because in October 1958 they removed for the first time in the post-war period all hire purchase controls. A year later car sales were up 30 per cent. In October 1959 they had the "Never had it so good" election with the return of a Conservative Administration with, lo and behold, a majority of 100.

Mr. Roger King: rose—

Mr. Williams: Interestingly, six months later those hire purchase controls were reintroduced. The signs are that the Government will have to do the same in the next 12 months.

Mr. Roger King: Is the right hon. Gentleman suggesting that all those people who buy things on hire purchase are immoral and that, because they cannot afford them for various reasons, they should not engage in a financial credit system which will enable them to purchase the products?

Mr. Williams: Not at all. We have argued this point for several years. It is the Prime Minister who has been trying to draw the parallel that the nation must live like the thrifty housewife, must never spend beyond its means and never live beyond its immediate income. We have said that, in the same way as the consumer society would never have got off the ground in the post-war period had that been the prevailing ethic at the family level, the prosperity of the western world would never have been established had that ethic dominated the economic thinking of countries in the post-war period.
Part of the so-called recovery has been the 15 per cent. increase in consumer spending resulting from a temporary hire purchase boom. There are two other temporary factors. First, the "A" registration has had an abnormal impact on new car demand and, secondly, fleet owners, under pressure from interest rates and squeezed profit margins, switched from a two-year to a three-year replacement cycle. This happens to be the third year and

so more fleet owners have been replacing vehicles this year. Even so, yesterday The Observer quoted the findings of a study by the Economist Intelligence Unit which forecast that there will be a 6·2 per cent. fall in the United Kingdom car market in 1984—back under the 1 million figure of production for British cars.
This country has a low level of car possession. We should be a fruitful market for the industry. Data Research International has shown that until 1968 we had the lowest car ownership figure of any major European country. Of 21 EFTA registration authorities, only five had fewer cars per 1,000 of population than Britain. The growth in our domestic market has been smaller than everyone else's. This has happened under various Governments. Over the past 20 years, car ownership in Britain has expanded two and a half fold; in France, from almost an identical starting point, it has expanded three and a half times; in Germany, from a slightly lower starting point, it has expanded four and a half times; and in Italy, from a considerably lower starting point, it has expanded eight times and the total possession figure is far higher than in Britain.
This is reflected into the issue of economies of scale for domestic productive capability. Britain now has a production level of 0·91 million vehicles this year, while the French are producing 2·7 million, the West Germans 3·8 million and the Japanese 8 million vehicles. Let us think about what that disparity means in terms of the economies of scale not only for the assemblers but for the component manufacturers. When we take into account the tied imports, the market available to the component manufacturers is substantially smaller than the usual British domestic output.
The Society of Motor Manufacturers and Traders has asked for a 2 million domestic market, which is reasonable. It claims that that can be achieved by the abolition of the special car tax, and it has explained how that could be self-financing in a number of years—although it recognises that there could be a shortfall on tax revenue in the first year or two.
I wish to put a positive proposition to the Minister, which I hope he will consider together with his right hon.Friends at the Treasury. Why does he not offer the manufacturers a deal, as he is doing with Nissan? Why does he not say to them, "We shall seriously consider the possibility of removing the special car tax burden in exchange for specific and tight undertakings on the level of sourcing of components and vehicles for the British market"? That would be a fair and good deal, which would be welcomed by both sides of the House. I hope that the Minister will consider that. I do not want an answer today, but perhaps he will write to me if he thinks that there is merit in the idea.
We are faced with the problem of a Government who lack perception and understanding of and concern for the problems of an industry facing a potentially disastrous future. Our United States-owned companies are increasingly committed to investment in Spain, Portugal and South America, and their policies are increasingly determined overseas. Our only British company, British Leyland, is only medium-sized and is now being encouraged to sell its profitable sections. Having been told that it is at a grave disadvantage because it is not as large as its competitors, it is now being told that it must make itself smaller by selling off its profitable parts. While productivity is improving, evidence produced by the


industry shows that that increase is not significantly greater than the increase in productivity among our competitors—so we are deriving little benefit from that.
We face a future in which world markets will not expand as fast as new capacity, yet we already have excess capacity. Our traditional OECD market is near saturation, but as a result of unfair tariffs and quotas we are excluded from the markets that offer future growth. Those same markets are the areas in which much of the new car productive capacity is being set up.
The industry desperately needs new investment in the assembly and component sector, yet it is aware that if it succeeds in achieving growth it may in the medium term face a crisis through a lack of skilled labour to sustain that growth because of the axing of training programmes.
The industry is central to the recovery of all manufacturing industry in Britain, yet the Government have no policy for it. The picture is of an industry fundamentally in decline and of a Government who lack the will and understanding to act in time to save it.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): I join my hon. Friends in congratulating my hon. Friend the Member for Birmingham, Northfield (Mr. King) on raising this subject today. It is the first time for a very long time that we have had a debate on the motor industry, and it is extremely welcome. I also congratulate him on the way that he addressed the House and on the content of his speech.
My hon. Friend's constituency has been represented by many people who have championed the motor industry —including the late Jocelyn Cadbury, whose death was a great loss to the House. He was a formidable champion of the industry, and my hon. Friend is a worthy successor.
This has been a serious debate, although I am not sure that I take seriously all the comments made by the right hon. Member for Swansea, West (Mr. Williams). Fortunately, he will not be present for the remainder of the debate so I do not have to follow his argument, although I had no intention of doing that anyway. The seriousness with which the Opposition view the debate has been demonstrated not only by the right hon. Gentleman's speech but by the absence of his supporters from the Back Benches. I also note that no representatives of the SDP or the Liberal party have been present during the debate.
As it is nearly the end of the year, we can look back on what has been a significant year — in several respects, an encouraging one for the motor industry. There have been new models, such as the Maestro, which has been an outstanding success. Car sales have reached a record level. There has been no shortage of demand, with an all-time high of more than 1·72 million sales during the first 11 months. Of course, the right hon. Gentleman tried to explain that away with his usual pessimism by saying that if the sun shines today, it will inevitably rain tomorrow. But we do not accept that. Despite the spectacular increase in the market this year, as my hon. Friend the Member for Bromsgrove (Mr. Miller) said, we have managed slightly to cut back the penetration of car imports. As he reminded us, additional labour has been taken on at Cowley and at Luton with a double shift. They may be small additions to the labour force, but it is encouraging. It shows what happens when companies become more competitive and increase productivity.
The car industry symbolises Britain's manufacturing industry. It used to dominate the world. Although we can hardly believe it today, during the 1950s we were not only the largest exporter in the world but, after the United States, the second largest manufacturer. The 1960s and 1970s saw many problems, such as the failure to develop new models, and poor industrial relations, but today, contrary to what the right hon. Gentleman said, the industry again symbolises British industry in its determination to overcome its past problems and reputation and to begin the fight back. That has been shown in some of the encouraging results. As my hon. Friend the Member for Warwick and Leamington (Sir D. Smith) said, there has been a dramatic improvement.
Of course, we all recognise that the industry is still not secure. Our productivity has improved faster than that of our competitors, and must continue to do so. I sometimes receive representations from industrialists who say, ''We have had a bad time. Our productivity has been improving markedly, so what will the Government now do for us?" That is a nonsensical approach. I hasten to say that that attitude is not taken by the motor industry. Industry will survive only if productivity follows a moving target. We must continue to improve.
My hon. Friend the Member for Bromsgrove and the hon. Member for Coventry, North-East (Mr. Park) raised the serious subject of the Commission's proposed regulation on block exemption. The Government support the general principle of block exemption, which is obviously right.
The motor industry has vast investments—there are the dealerships and the dealer networks which serve the interests of the consumer — and it is right that they should be protected. But two concerns in particular worry the industry. One is the possible requirement that a dealer may demand the supply of a vehicle with foreign specifications at his own local price and the second is that franchised dealers may not be bound by wholesale restraints if the recommended tax-exclusive prices in any other member country are 12 per cent. or more higher. We are well aware of the industry's concern on this matter. I have met the SMMT on several occasions and discussed it. It relates to the whole question of car prices and differentials.
It has always been our view—we have made this clear to the industry—that in the long run the car price differential cannot be maintained, but it may be exaggerated in the short term; it may be exaggerated by currency movements or by price controls in one country, and it would be wrong if price controls in one country had to be exported to another country. In so far as the differential reflects lack of productivity, no one can say that our industry has not been making stupendous efforts in the recent past to improve its productivity and efficiency. We have always made it clear that in our view the differential would have to go gradually and could not be maintained in the long run. But if we had precipitate action or artificial moves that removed that differential, that could be a disaster for the industry.
The adoption of regulations of this type, by which the Commission exempts whole categories of agreements under competition rules, is subject to a consultation procedure. One step is the publication of a draft in the Official Journal, and that is the stage we have now reached. Now, manufacturers and others have the chance to comment on it. There will be further consultations,


including consultations with committees of experts from different Governments. It will take time and I can at least give the assurance that it will not suddenly be adopted in its present form. We are under no illusion as to its importance for the industry, and we shall watch it carefully.
A number of my hon. Friends spoke about Nissan. The story to which reference was made from The Guardian about the possibility of Nissan purchasing Austin-Rover is totally untrue. Contrary to what has appeared in some newspapers, no decision has yet been made by the company. It has always been the view of the Government that Nissan would be welcome here, provided that the project would have a high local content. Certainly it would not be acceptable if it were in the terms, described earlier, of a "Meccano outfit". That would be a quite unacceptable proposition.
I assure my hon. Friend the Member for Bromsgrove that the assurances that he has received from my right hon. Friend still apply. The House will understand that I cannot go into the details of the negotiations, but obviously we should welcome Nissan to this country only if we felt that it was a project that in net terms would add to the United Kingdom both in terms of output and employment. It is true, as has been pointed out, that there is excess capacity in the industry in Europe, but in this country we have a market 60 per cent. of which is supplied by imports, and if we could get more competitive production here, that could be greatly to our advantage.

Mr. John Golding: The Minister referred to the net effect of such a move. Will he say what the net effect would be on the components industry? Those who make components — this particularly interests those in my constituency — are concerned to ensure that no net loss occurs in that industry and that those employed in it do not suffer.

Mr. Lamont: The whole content of my remarks has been to assure the very people to whom the hon. Gentleman referred.
Several of my hon. Friends spoke of the car tax. I agree about the importance of the sheer size of the market. That is one of the disadvantages that we in this country have; our market is smaller than that of several other countries and we cannot create a larger market just like that. Some of my hon. Friends referred to the market in Germany and France. They are larger and richer countries, with a higher gross domestic product per head. We cannot overnight just create, much as we should like to do so, a market penetration among all consumers equal to that of competitor countries in Europe.
The case for the abolition of the tax has been put to my right hon. Friend the Chancellor of the Exchequer, who has undertaken to look carefully at the request. We must take into account the possibility that a bigger car market in the short term might lead to higher levels of imports. It has been pointed out that what we have seen in the last year has been the growth of the market to a substantial extent and that that has not led to an increase in imports. That is so, but we have, with several domestic producers, got close to the limits of capacity. I am not saying that that rules it out, but it is a factor that we must take into account, and I repeat that the Chancellor has undertaken to look seriously at it.
Reference has been made to the terms on which trade takes place with Spain in motor products. I understand the strong feelings that exist in the west midlands and elsewhere about that. The terms of our trade with Spain are established by treaty; they can be altered only through the Community. Since those special terms were agreed, Spanish industry, behind tariffs, has grown much stronger and many people feel that those terms are out of date. In the long run, the accession of Spain must be the answer, but alterations in the interim must be negotiated through the Community and in those negotiations we must take into account our overall relations with Spain, including our general trade relations with that country.
Earlier this year the Community negotiated to reduce duty quotas, and that will give some modest opportunities for BL. Those quotas are to be renewed annually and, of course, we should like to see them enlarged further if possible, and that will be our aim.
Several hon. Members referred to the multinationals and tied imports. It is important to stress, as did the hon. Member for Dagenham (Mr. Gould), that the multinationals are a vital part of our motor industry. We are anxious throughout industry to encourage foreign investment to this country, and when it comes we should regard it as being as much a part of the United Kingdom economy as domestic firms.
The multinationals operate a spread of operations to get the necessary scale, and the Ford and General Motors commercial vehicles and components operations in this country are designed to serve not just the domestic market but the export market. We hope that the United Kindom will have the opportunity to share in these arrangements. But that right must be earned; it cannot be taken for granted. Ford has made it clear that, notwithstanding some recent improvements in some of its plants in this country, they do not all come up to the best standards in other countries in Europe.
These investments also have a long time scale; they take years to come to fruition, and in some ways the United Kingdom is still suffering from the period when it offered a less attractive and less profitable location than elsewhere. We cannot turn back the clock, but the signs are that the commitment of the multinationals to the United Kingdom is being maintained. Vauxhall has announced investments of £130 million, including £70 million for Bedford. Ford has followed up its £225 million investment in the Sierra with half the amount spent on modernisation at Dagenham, and there is to be a £100 million programme at the Dagenham engine plant.
The Government look to the multinationals to maintain a broad balance in their activities, to build vehicles and to buy components in the United Kingdom to a value at least roughly equivalent to their sales in the United Kingdom. My hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) pointed out in an intervention that there are signs that the position could improve further. I was pleased to note the recent statement by the car companies about planned increases in United Kingdom sourcing of cars. Vauxhall is already operating a double shift at Luton and has just announced that it is to pull forward by four months to April the introduction of a second shift at Ellesmere Port. Those changes will mean that by the end of next year Vauxhall will be producing in this country about 65 per cent. of the cars that it sells here. Ford, too, is following a production plan that will lead to two-thirds of its sales being met from domestic production.
On the assumption that those plans are fulfilled and there is a continuing strong performance by BL and other United Kindom producers, there is a prospect next year of a reduction in the level of import penetration by several percentage points. That is not, of course, a cause for complacency. As I have already said, there are certain United Kingdom plants where further improvements must be made if performance is to come up to the level in plants elsewhere in Europe.
It is appropriate to single out BL. Not only is it the largest United Kingdom vehicle manufacturer but, as far as I know, it is the largest employer in the constituency of my hon. Friend the Member for Northfield, and I should be surprised if it was not. During the past few years, the company has made remarkable progress, much of it due to Sir Michael Edwardes.
The significant point about BL is that a large part of its improvement has been achieved at a time of recession. When the fortunes of some of our other motor car companies have been deteriorating, BL's position has been improving. It is important to realise that it is not yet out of the woods. BL still has a long way to go before it can remunerate the vast amount of capital that has been poured into it. Until it does that, it will not be truly viable. The company has staged a remarkable comeback which many might have thought impossible.
BL's strikes used to hit the headlines; now its sales do. The Metro, launched in 1980, has established itself as the leading small car in this country, and that performance is not limited to Britain. One Metro in every three is exported, and the car is spearheading Austin-Rover's drive to rebuild its share of the continental market.

Sir Peter Emery: Before my hon. Friend leaves the financial side of BL, may I ask whether he knows that the Select Committee on Industry and Trade has been concerned about the Government's investment? Will he tell the House that BL will not be coming to the Government for any more money for further planning? If it does, what will be the Government's approach?

Mr. Lamont: Another £110 million is due to BL if and when it is needed. That has already been announced in the House.

Sir Peter Emery: Will that be it?

Mr. Lamont: That is the end of Government support for the company. That has been made clear, and BL's board has accepted it.
BL's great achievement with new models continued after the Metro with the Maestro in March this year, and it was an instant success. In its first month, it recorded more sales than any new model previously launched, and it has sustained that performance. I am confident that its sister car, the LM11, will be equally successful when it is introduced. Both those models are manufactured with the most up-to-date technology.

Mr. Geoffrey Robinson: rose—

Mr. Lamont: I shall not give way, because other hon. Members wish to speak.
Export sales in western Europe increased by 26 per cent. between 1981 and 1982. BL is successfully going back into Europe for sales. As a whole, BL is well on course to break even at the trading level this year, and that will be the first time for many years that that has been achieved.
The progress of Jaguar has, if anything, been more spectacular. I do not agree with the hon. Member for Dagenham that that is due just to the exchange rate. It is not. Productivity is not improved from 1·5 cars per man in 1980 to 3·5 cars per man in the first half of this year because of the exchange rate. It also does not bring about great improvements in quality and reliability. That has been due to the hard work of the work force and management.
Jaguar sales in the United States in 1982 were 120 per cent. above those in 1981 and 300 per cent. above those in 1980, and that is a remarkable achievement. Hon. Members will be aware of the contribution that Scotch whisky makes to the United Kingdom balance of payments. Far be it from me, especially as a Scot, to say anything derogatory about that distinguished beverage, but Jaguar cars now look set to overtake Scotch whisky as the prime United Kingdom export to the United States.
Those are just a few examples of the progress that has been made. None of them could have been achieved without the dedication and hard work of management and work force, and I am happy to pay tribute to them. The company has now reached the stage where it is realistic to start planning its return to private ownership. No one should expect that to happen overnight. The company is very large and, as with many large companies, some parts are doing better than others. I am confident that 1984 will see the first steps in the return of BL to private ownership. That is our priority for BL, and I assure the House that we intend to see it through.

Mr. Deputy Speaker (Mr. Paul Dean): Before I call the next hon. Member, it might be helpful if I remind the House that the debate must end at seven o'clock, and quite a number of hon. Members hope to speak.

Mr. Geoffrey Robinson: I congratulate the hon. Member for Birmingham, Northfield (Mr. King) on choosing this subject for debate. It is a hardy but necessary annual, because every hon. Member is aware of the continuing central importance of the motor industry to the economy. Over the last 10 or even 20 years of British industrial performance, it is staggering to see the extent to which the decline in the whole area of manufacturing industry, especially the mechanical engineering sector, has been a function of the massive decline in the British motor industry. That decline has continued under Governments of both persuasions—that has been agreed by both sides of the House—throughout the past two decades. Sadly, since 1979, because of high interest rates and the intolerable level of sterling, the decline has accelerated. We hope that with more modest and less monetarist economic policies, we shall see some improvement in the industry's performance.
From 1979 to 1982 we saw the devastation of the west midlands and the city which I represent and about which my hon. Friend the Member for Coventry, North-East (Mr. Park) spoke so forcefully. Factory closures, the spate of redundancies and the harsh reality of the lengthening dole queues throughout the west midlands have left scars not just on managers and the work force, who put in many decades of dedicated work in assembly lines and machine shops and who served their apprenticeships in the great tradition of the industry, but on generations of youngsters who are now coming out of school without any prospect


of obtaining work. When I hear the Minister say that the Government's priority for BL — the only major nationally owned motor car company producing vehicles in this country — is privatisation, I think how wrong their priorities still are.
The Minister is responsible for our great motor industry and his concern should be the future of the industry as a viable and expanding one. That cannot be encapsulated in a word such as "privatisation": it can be realised only in the hard world of internationally traded consumer goods, in which we have barely started to recover. I speak of British Leyland as a whole when I say that.
The Minister said that the recovery has only just begun; how right he was. The latest figures tell us that imports still claim 66 per cent. of the home market. The Maestro is a good car, but what percentage of the market is it claiming? The Minister would not let me intervene to ask that question but perhaps he will care to tell us before the debate ends. How does the Maestro's share of the market compare with the other leading contenders in the critical sector in which it competes for the family saloon market? It is a good car and it is doing well, but it epitomises precisely what the industry as a whole has to do. It still has to go a long way.
Privatisation, far from being the top priority for British Leyland, is a damaging irrelevance. The sooner that the Minister accepts that, the better. I hope that he will do so and tell the Right wingers within the Conservative party, who wish to return to an industrial state that never really existed, that the first priority is the health, strength and expansion of the British-owned motor car industry. The sooner he does that, the sooner the Government will be taking the approach that the whole House would want.
The Minister of State addressed himself to many of the questions that have been raised by hon. Members on both sides of the House. On two matters he went some way towards giving us a measure of satisfaction. I am sure that the hon. Member for Bromsgrove (Mr. Miller) and my hon. Friend the Member for Coventry, North-East will agree that he gave a fulsome reassurance on the block exemption. However, the more fulsome the Government's reassurances and the more committed they are to doing something, the less we begin to trust them as time passes and, unfortunately, they fail to deliver the goods. That comment applies to Nissan and to imports from Spain.
The Minister may be watching closely the operation of the block exemption, but we shall be watching him closely. As he has said, it is an issue of great importance to the industry. However, we are at an early stage in the negotiations and we cannot prejudge whether the Minister is likely to do any better than he has done on other critical issues which are of topical, as opposed to historical, importance, and which were featured in the wide sweep of the industry to which we were treated by the hon. Member for Northfield.
Among the topical factors is the proposed deal with Nissan. Does the Minister agree that he and the Secretary of State have kow-towed long enough? I realise that the hon. Gentleman is only the lady in waiting to the chief geisha girl, but it is two and a half years since we heard the Government's announcement. The hon. Gentleman was one of the occupants of the Government Front Bench when the announcement was made, for he was the Under-Secretary of State. The then Minister of State, who has

become the Secretary of State for Trade and Industry, announced with a great fanfare of trumpets that the deal had been clinched.
We were told that by November 1981 we would have the full details laid before us. The Minister said that it was a great deal for British industry and one that would create many jobs. He went so far as to say that various Members would be clamouring to have the Nissan development situated in their constituencies. I remember the occasion extremely well. The Minister told my right hon. Friend the Member for Salford, East (Mr. Orme), the then shadow spokesman on these matters, that he could be sure that the development would not go to his constituency. It seems that we can now be sure that it will not go to any Member's constituency.
I have had my experience of negotiating with the Japanese. I do not wish to make the Minister of State's job any more difficult, but what can he tell us about the negotiations? It is no good continuing with vagaries and platitudes. We need to know, so that we may end a prolonged and unnecessary period of uncertainty in the industry, whether the negotiations are to be concluded. If they are, will they be on the terms originally envisaged, which involves local content and exports?
The Minister will be well aware that the potential of the Datsun affair and the benefits that it could bring to British industry have been grossly exaggerated, while the negative effect that it could have on present domestic production has been grossly underestimated.
Apart from home-based component manufacture and the projected level of exports from the United Kingdom, is there within the agreement any provision for a real exchange of production and product technology? That seems to be the most important issue of all, and I noted that the Prime Minister nodded when I made the point when the deal with Datsun was announced. If the Nissan project is to be of any real benefit—the same applies to the Austin-Rover and Honda project—it must involve a meaningful exchange of manufacturing, engineering and product engineering technology.
We can project marvellously propitious sets of economic circumstances for a renascent British motor car manufacturing industry, but unless we have sufficient resources in manufacturing and product engineering we cannot have an industry. That is the base of the industry and that is the base on which the Japanese have built an industry that leads the world. They lead the Germans, the French and the Americans.
In a study undertaken by the director of manufacturing of Ford of Europe, an Englishman—he is the only Englishman to have that level of operational executive responsibility within the Ford organisation — reported that there were two eras in the history of motor cars. He said that there were BJ and AJ—before Japan and after Japan. That formed the title of his report and that is the way in which Ford sees the threat to the massive Ford motor car company with its enormous international strength. We need to know whether we are to have access to the technology of Japan. Will there be a similar and full exchange of technological information between Austin-Rover and Honda?

Mr. J. F. Pawsey: Does the hon. Gentleman agree that there has been a voluntary agreement with the Japanese and that they are now taking only 10 per cent. of the British car market? If we are


anxious to put the British motor industry on a sound footing, we should be seeking to abolish car tax. If we do that, we shall expand the home market. That would help to put the British motor industry firmly back on its feet again where it belongs.

Mr. Robinson: It seems that the hon. Gentleman realised that he would not catch the eye of the Chair and felt that he had to make his mark on the debate.
We have heard another series of platitudinous reassurances on car tax from the Minister. I am grateful to the hon. Member for Rugby and Kenilworth (Mr. Pawsey) for anticipating the next topic in my speech, about which we heard nothing from the Minister. Perhaps Conservative Back Benchers feel more sore about the Minister's performance than my hon. Friends and I.
I thank the Minister for his second positive reassurance. He said that there are no plans—this needs to be clearly and unequivocally set out on the record — for any outright sale of Austin-Rover to Honda. The Minister will have seen the newspaper reports and he has experience of ministerial contacts with managers and employees in the motor industry. He knows that the reports that have appeared in the press are probably without any foundation and are the products of journalistic speculation. However, they can have an enormously damaging and disconcerting effect on managers and employees.
Lastly and briefly, I turn to the vexed question of Jaguar. I had the honour and good fortune to succeed Maurice Edelman. Both Jaguar factories are located in our constituency, and I am proud to represent them. Although in some ways I wish I did not carry this distinction with me, I am also proud to have been for two years the chief executive of that great company. I welcome the success of the new management. I recruited Mr. John Egan into British Leyland. When I was financial controller of British Leyland, he served as my deputy controller. I would not have recruited him if he had not been a very good man.
I shall be delighted if the Minister of State is proved right and the sales figure achieved in 1973–75 is exceeded this year. In 1973–75 the recession was at its height and there had just been the explosion in oil prices. Everything is relative. Our achievements in those days were made possible by good industrial relations. Workers always prefer to work rather than to be on strike, and it is amazing what one can do if one carries the work force with one.
I am pleased that progress is being made. I can pay testimony to the outstanding work being done by management and work force together at Jaguar Cars at present.
The Minister's top priority should not be the privatisation of Jaguar or of Austin-Rover. His priority should be the health, strength and welfare of the British motor industry, as mine is a concern for Jaguar Cars, which is situated in my constituency. The company is being hawked around the City of London. Many doubts are being expressed, and the Minister himself is cautious about how quickly any sale could be achieved. There should be the widest consultation with the work force, hon. Members who represent Oxford, and many others who have some sense of the considerations that will determine the future success of Jaguar. There are doubts in Oxford, in particular, about long-term research and development.
There is a direct parallel with British Airways. There has been a massive injection of public funds. If a buyer

cannot be found at a sensible price, will the Minister consider leaving Jaguar as an entity separate from the rest of British Leyland, with its own negotiating procedures and industrial relations practices, its own product development, and its own franchising plans in Europe as in the rest of the world? Will he also allow it to maintain a continuing link with the large-scale, long-term research and development facilities of British Leyland? That is a much better plan for Jaguar than what the Minister has outlined. If the negotiations with Jaguar prove as difficult as those with Nissan — and as those with British Airways, given stock market conditions, may well prove —I hope that the Minister will consider an alternative for Jaguar which might be far better than the plan being pressed upon the management against the advice of the board of British Leyland as a whole.

Mr. Steve Norris: I welcome the comments of my hon. Friend the Minister on a number of grounds. I welcome them, first, on behalf of my constituents. The employees of British Leyland Cowley works will take great heart on hearing those comments. The achievements at that works, and the sacrifices that made those achievements possible, are memorable and worthy of our congratulation. I have a personal interest in that I own a motor vehicle dealership, and I welcome the Minister's remarks on the block exemption.
I welcome the Minister's assurances to my hon. Friend the Member for Bromsgrove (Mr. Miller) about Nissan. There are many factors here that we must not overlook. A number of hon. Members on both sides of the House have referred to the present overcapacity in the market place. In Europe, overcapacity totals about 3 million units. In the United Kingdom the Austin-Rover group alone produced 480,000 units last year and plans to produce 510,000 units next year, but there is a productive capacity within Austin-Rover group of about 750,000 to 800,000 units. It is worrying that we should contemplate introducing an additional 200,000 units of capacity into a market that already possesses at least that capacity within the Austin-Rover group alone. When one adds the additional space that there must be at Dagenham, Ryton, Luton and Ellesmere Port, it is clear that we must be careful before we commit ourselves to such a project.
Secondly—I appreciate the fact that my hon. Friend the Member for Birmingham, Northfield (Mr. King) may wish to attempt a brief summing-up—there is the cost of the project. Nissan has not yet announced its intention of coming here, but if it does the cost to the taxpayer will be considerable. We must consider that cost in relation to the net increase of real jobs in the industry. The Minister referred to the possible guarantee of minimum content. I draw his attention to a report in The Times of 8 December 1983:
The latest plan is thought to be for a plant of no more than half that size"—
half the size of the original project—
to build a compact car with a much lower initial British content.
The Japanese labour unions have made no secret of the fact that they are wary of exporting too large a proportion of the actual value of motor vehicles sold in Europe. It is hoped that if that proposition is made by Nissan, it will be strongly resisted by the Minister and his colleagues in the


Department. That would be the thin end of the wedge, and if we allowed it we would rue the day. Lord Bruce-Gardyne has said, of the Nissan deal, that.
The new jobs are what it is all about: and it is part of the ethos of the Department of Industry — not to mention the Scottish, Welsh and Northern Ireland Offices—that new jobs in place of those already in existence are a snip.
That is what we are facing. The Nissan proposal is indeed a Trojan horse which offers the glitter of fresh new green field jobs, albeit at substantial cost to the taxpayer, but will result in the quiet loss of jobs in areas of the country such as that which I represent, which have no regional aid and no development status. We would do well to remember the classical precedent and to ensure that the disaster that befell the Greeks does not befall us.

Mr. Roger King: Both sides of the House believe that the British motor industry has a role to play in this country and we need to encourage it to the best of our ability. We have expressed our anxieties about the Nissan development, Spanish exports and many other things. At the end of the day, the quality of the product and putting it together in the right way are important. British industry has always been good at that, and long may it continue. I commend the motion to the House.

Question put and agreed to.

Resolved,
That this House acknowledges the important contribution to the economy of the motor industry; congratulates the car industry on its improved performance; acknowledges Government support; and calls on the Government in the development of its policies to give continued encouragement to the industry.

Orders of the Day — Coal Industry Bill

Not amended (in Standing Committee), considered.

7 pm

The Under-Secretary of State for Energy (Mr. Giles Shaw): I beg to move, That the Bill be now read the Third time.
Assuming that I may have the privilege of catching your eye, Mr. Deputy Speaker, I should like to reply in the usual way.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): During our discussions in Committee no one denied or failed to acknowledge that the coal industry is going through a period of considerable financial difficulty. The Bill reflects those difficulties with an increase in the large borrowing powers limits, deficit grants and redundancy payments.
I wish that the problems of the coal industry could be debated in the media as well and seriously as they have been in Committee. It is a tragedy that this great industry is treated so badly and trivially by the media. The media talk about bogy men, scapegoats and the like instead of appreciating the considerable problems that the industry has faced during the past three or four years. During the Committee's five sittings, the Opposition said that we must study the coal industry and its financial problems in the context of a recession and in part as a victim of the Government's economic management. That applies to many of our great industries. We argued that the coal industry could not be divorced from the general economic climate and the circumstances in which it has to operate.
Steel production has been cut drastically during the past three or four years. As a result, there has been a drop of at least 30 per cent. in the sale of electricity to the steel industry. Every time there is a cut in the steel industry, or in electricity consumption, there is a cut in the coal industry. That is the context in which we have attempted to place the financial problems of the industry.
This country's primary energy needs have fallen by 13 per cent. during the past three years. I wish that we could argue that that was the result of imaginative conservation measures. Economic suffocation, not conservation, has led to a dramatic fall in energy consumption. That has been reflected in the power stations. In 1983, 18 million tonnes less coal was consumed than in 1978. Power stations consumed 10 tonnes less coal last year than in 1979. It is in that context that we should consider the coal industry's financial problems.
In addition, as we revealed in Committee, the past year has seen the largest increase in nuclear-generated electricity for 20 years. That is before the three new nuclear power stations come on stream within the next two years. That represents 9·5 million tonnes of coal—the total output of the south Wales deep-mine and open-cast coalfields.
There is little wonder that anxiety has been felt in the coalfields about the general state of the market and extra nuclear-generated capacity. Strong evidence has been given to the Select Committee on Energy and by witnesses


at Sizewell to demonstrate that we should not go ahead with duplicating the power station capacity, as Governments in the past have proposed.
The fall in demand and the increase—the threat as it is seen by the mining industry—in nuclear development are reflected in huge and growing coal stocks. There are well over 50 million tonnes of coal on the ground. The coal board has been incurring large debts and it has to pay huge interest on those debts. The National Coal Board has had to pay £1·1 billion in interest charges over the past three years. That is equivalent to the board's external financing limit for one year.
There is little wonder also that there is a growing fear of an accelerated pit closure programme. That fear existed even before the publication of the Monopolies and Mergers Commission's report in the summer. The report fuelled those fears, and they have not been allayed by the increasing number of pit closures about which we read almost daily. Twenty pits have been closed this year. The loss of another 700 jobs has been announced this week at the Herrington pit in Durham. Many of my hon. Friends expressed the fear in Committee that during the Bill's lifetime we shall see mandatory redundancies in the coal industry. What is more important, within a week or so after the Bill completed its passage in Committee, we have already seen those fears come true. The coal board's statement about the Durham pit closure gave no guarantee that everyone would be redeployed and that there would be no mandatory redundancies. For the first time for many years we shall see mandatory redundancies in the coal industry.
My hon. Friends said many times in Committee that the coal industry, the miners and the communities which form the industry are willing to change. They are used to change. They have had to change more than once. We emphasised strongly that the changes and problems of pit closures must be set against different economic, social and employment factors than in the past. I described vividly —and I was supported by my hon. Friends — the changing attitudes in mining communities such as mine. Once — perhaps because there was a growth in the economy and firms were offering alternative employment —there was a more relaxed attitude towards pit closures. That is no longer the case. That attitude has changed drastically during the past two years, chiefly because, as the Monopolies and Mergers Commission report shows, the number of jobs has been dropping drastically during the past two or three years.
In Committee, I quoted the figures for Wales. It is worth reminding the House of them. In 1979, there were 30,000 to 40,000 more jobs in the Welsh economy than during 1974–75. Those jobs have been lost to the Welsh economy since 1979. There has been a drastic decline in employment and in the number of jobs available. That was recognised in the Monopolies and Mergers Commission report, which we analysed critically. That report is no friend of the mining industry, but on the social and economic consequences of pit closures it said:
What can be stated with certainty is that in the absence of increased employment opportunities in continuing collieries or in other industries in coal-mining districts, accelerated closures would cause unemployment levels to rise in parts of the country already suffering unemployment levels far above the national average; in addition there would almost certainly be some direct effect on employment in other sectors, eg railways and various other service industries whose operations depend on NCB business.

Those hon. Members who represent mining constituencies can testify to the truth of that statement and to the knock-on effect associated with the destruction of jobs in the mining industry.
We have been and remain willing to change and to accept closures, but we have rightly warned that we cannot accept an accelerated pit closure programme such as was mooted in the Monopolies and Mergers Commission report. Nor, I am glad to say, could the Government in February 1981. They were under considerable pressure from the industry and mining communities, and they rightly concluded that an accelerated pit closure programme was socially unacceptable. They withdrew the programme and adjusted the financial targets and borrowing limits of the NCB to accommodate the change. There should be some common ground between the Opposition and right hon. and hon. Members who formed the Government in February 1981. We cannot accept the type of accelerated pit closure programme which, if not advocated, was mooted by the Monopolies and Mergers Commission report.
In Committee, we emphasised the industry's financial difficulties. We also want to emphasise the tremendous potential of the industry and the coal resource. The Minister underlined that point and the success of the British coal industry when, in a written answer giving the operating costs per tonne of the coal industry in Britain compared with our European competitors, he said that Belgian coal cost £61 per tonne to produce, French coal £45 per tonne, German coal £47 per tonne and British coal £41 per tonne. More interesting than the figures was his explanation of them. He said:
The lower figure for United Kingdom production costs reflects the relatively high level of capital investment in the United Kingdom coal industry "—[Official Report, 18 March 1983; Vol. 39, c. 616.]
The Opposition accept that we can reduce costs and have a profitable coalfield through investment. We know from experience that if money is put into the industry, productivity will improve. In my constituency, 100-yearold pits that have had the benefit of investment have broken production records month after month. We accept the combination of investment and change. We also welcome the development of great new pits at Selby and soon, we hope, at Belvoir.
In Committee, we also argued the need to invest in the special coals with which Britain is endowed. I refer to the anthracite fields of south-west Wales. We are now importing 340,000 tonnes of anthracite a year because we do not have the capacity to develop our own industry. That industry needs new investment. We have also argued the case for investment in premium coking coal fields, such as Margam in south Wales and elsewhere.
We want investment in new pits but we should not ignore the renewal of our old pits. We do not want the balance of investment to be tilted drastically in favour of new pits, so that old pits, such as those in my constituency, are denied the chance to he profitable and successful. Investment in the older pits could produce great dividends in terms of untapped reserves. Those who represent traditional coalfields read with anxiety the Monopolies and Mergers Commission's suggestion that the NCB's investment plans for 1990 would result in a
decline from approximately 32 per cent. of total capital investment in 1981–82 to 12 per cent. by the end of this decade.
If there were such an imbalance, the result would be the decline of the older pits through higher costs. The


Opposition will watch future investment with great care. We hope that there will not be an imbalance in favour of new mines to the detriment of the old pits.
Although there was some agreement about the need for the financial structure proposed in the Bill, there were major differences of opinion in Committee. One arose in regard to privatisation of the NCB's assets. I do not want to rehearse our interesting debate in Committee about the ideological fantasies of the Minister's predecessor, who is now the Financial Secretary to the Treasury. When he went tramping round the coalfields, he did not mention privatisation of coal production. He merely endeavoured to be everyone's best friend. Nevertheless, we need not spend too much time on him. We know his record as a privatiser — he master-minded the sale of Amersham shares when in the Department of Energy. We all know what happened to them. They doubled in price, and more than half of them changed hands overnight. That was supposed to be an example of remarkably skilful financial handling.

Mr. David Hunt (Lords Commissioner to the Treasury): That is irrelevant.

Mr. Rowlands: That matter is as relevant now as it ever was as the then Minister has returned to the stage in the guise of a Treasury Minister advocating more such failures.
It emerged in Committee that the NCB has been instructed by the Government to set a £10 million target for next year and, presumably, for successive years in preparation for privatisation. During the fifth sitting, we asked the Minister to give us some assurances. I hope that my hon. Friends will confirm this. The Minister gave us an assurance that there was no likelihood or prospect of privatising either deep mines or open-cast production in the lifetime of the Government. No other interpretation can be placed on the Minister's words.

Mr. Giles Shaw: indicated assent.

Mr. Rowlands: I am glad to see the Minister nodding his head, confirming the nature of his assurance.
In Committee, the Minister was not willing to give us assurances about the privatisation of some of the ancillaries. What is worse, he failed to give us an assurance about National Smokeless Fuels Ltd. We said much about that in Committee, and there was a vote on our new clause on that matter. There is no operational or commercial case for trying to privatise any part of the NCB, particularly of National Smokeless Fuels Ltd., the operation of which is integrated into the production and development of the coalfields. I hope that this time the Minister will say that he will not approve any such act of privatisation.
I hope that there is agreement on both sides of the House about the strategic and vital character of this tremendous industry, which is developing a basic indigenous resource which was revalued after the 1973 crisis and should now remain one of the fundamental parts of our energy policy. The Opposition have asked throughout the debates that, when there is a recession and when economic demand is so low, we do not take a shortsighted attitude towards the development of the coal industry or take irrevocable decisions that would limit its

potential and future development. There is a tremendous potential for markets. We discussed them in Committee. There is liquefaction, coal to gas and the development of coal for industry. We bade the Minister repeatedly to say that he would renew the boiler conversion scheme and give grants so that a series of projects that apparently are ready to go can be given the go-ahead. There is great potential and there are future alternative markets for our coal industry. Therefore, it is vital that no irrevocable decisions are taken now that would limit development of the industry's full potential.
Inasmuch as the Bill provides a financial structure at a time of considerable difficulty and recession, we welcome it. Given that it does not yet close any options and is not based on a restricted and short-sighted view of the industry, we have given and will continue tonight to give it our support.

Mr. Michael Fallon: I have attended the debate under a misapprehension, because I had assumed that Third Reading was a time for reflection on a Bill rather than for repetition of points that had been made earlier. I have not yet heard anything that I did not hear on Second Reading and in Committee.
No one who served on the Committee will pretend that, although our discussions ranged far and wide, the Bill is anything but a holding Bill. It is the third such Bill that the Conservative Government have presented since 1979 and is almost identical to its two predecessors. It raises the external financing limits for the fifth and sixth times respectively. Although the Committee's discussions ranged over many issues that affect the coal industry, it still seems to me that the Bill does not go to the heart of some of the problems facing the industry.
I refer first to the industry's scope and size. We heard much from Opposition Members about recent discussion of privatisation. It seems to me that the hon. Member for Merthyr Tydfil and Rhymney (Mr.Rowlands) did not read correctly the great speech by the Financial Secretary on privatisation. Far from recommending privatisation of coal production and sale, he drew attention to the fact that coal production and sale were not in any true sense natural monopolies but were artificial monopolies, and that it was by no means self-evident that such monopolies were necessary or beneficial.
My hon. Friend the Under-Secretary of State ruled out privatisation and said that he had no current plans for it in the open cast sector for a reason that I found understandable. The reason was not that he was opposed to privatisation in principle — indeed, he strongly defended it—but that the financial objectives that were to be set for the board had an overriding importance and that the rearrangements that would have to be undertaken to enable the National Coal Board to compete efficiently should have predominance over more radical measures with regard to its scope and size.
Secondly, there is the NCB's efficiency and the need for it to compete more effectively with other fuels. In that context, the base document for the Committee was the report of the Monopolies and Mergers Commission. I was a little disappointed that we did not hear from my hon. Friend the Minister about a clearer timetable for how the recommendations of such an excellent report are to be put into effect.
The report was commissioned in March 1982. Initially the commission was asked to report six months after that, which would have been September 1982, but the deadline was extended to December 1982. The commission duly reported on 2 December. However, it was not until June that the report was published. We now understand from my hon. Friend that there is a full 12 months — until next July—for the NCB and the Government to respond to its recommendations and for the Government to consider their response to the NCB consideration. The report has nearly 50 recommendations. I hoped that we might have a better idea of how much progress we can expect on them.
Finally, the Bill does not tackle the long-term objectives of the NCB. I accept that there is a balance to be struck and that the Minister is not supposed to be managing the industry or interfering with the board's activities, but this nationalised industry is different from some of the others in that, as the Monopolies and Mergers Commission report said, it is almost wholly dependent on public finance and, more than that, it is wholly dependent on public finance in the short-to-medium term.
Therefore, the Government have a responsibility, beyond recruiting the best possible chairman for the NCB and providing it with more money by raising the limits time and again, to set the NCB firm targets to ensure that Parliament and the public get the best value for their money. In Committee those targets were officially publicised by my hon. Friend for the first time.
It might be for the convenience of the House if I reminded it of those four targets. The first was that the NCB should make a satisfactory return on its assets in real terms. However, the nature of the word "satisfactory" remained, as my hon. Friend put it,
to be quantified in due course.
I hope that "in due course" means "reasonably soon".
Secondly, in a marvellous example of Civil Service prose, my hon. Friend said that the second objective was that the NCB should
maximise its long-term profitability by securing those sales which are profitable on a continuing basis, in competition with other fuels." —[Official Report, Standing Committee H, 22 November 1983; c. 38.]
It is not clear to me what those words mean. When the NCB is instructed to plan its marketing, production and capital investment "accordingly", in accordance with that sentence, I am at a loss to know exactly how that planning is to be guided. Thirdly, the coal board is instructed that its objective is to reduce its operating costs in real terms for deep mines and open-cast production separately. Again, the phrase "in real terms" and the extent of the reduction remain to be quantified "in due course".

Mr. Dennis Skinner: I listened carefully to what the hon. Member said about the management of finances, but I have checked up on his past. He was an adviser to Lord Carrington, who got us into a mess in the Falklands. The folly of neglecting the Falklands is costing us £3 billion now. He was also an adviser on the Common Market, and last year during the audit it was found that £700 million was missing. I wonder whether he discovered where that money went when he was a European adviser. Some of it finished up in the Mafia's pocket in the olive oil ramp. Why does he not tell the House about that, instead of about miners, who go down pits to dig coal? He has never had to do that in his life, but has had his bread buttered by the taxpayer and the Common Market.

Mr. Fallon: I welcome the attempt of the hon. Gentleman to do a little research, but the danger is that a little research is not sufficient. Had he researched sufficiently, he would know that I assisted Lord Carrington before he was Foreign Secretary and, secondly, that no one has been more critical of wasteful expenditure in the EC than myself. Had he read my pamphlet, "The Rise of the Euro-Quango," he would have seen that I drew attention precisely to those abuses of expenditure that he criticised, criticism of which I share.
Neither the Bill nor our deliberations on the Bill have answered the most important questions. How do we reduce the uneconomic capacity in the coal mining industry, which, as the chairman of the board continues to point out, is dragging the industry down and making more difficult his task of finding markets for coal and of making the industry more efficient and competitive? Until it is answered, the coal board and those in the industry will continue to trade on the good will of Parliament and on the tolerance of those people and companies in my constituency who must pay the resultant high costs for fuel and who, as taxpayers, must contribute to the external financing limits of the industry.

Mr. Alexander Eadie: Third Reading provides an opportunity for hon. Members who have not had the pleasure of serving in Committee to gain more information than the Government were apparently able to provide in Committee.
The Minister visited the Seafield colliery in Fife, which is about five miles from my home. I have worked most of the coal measures there myself. The hon. Gentleman would probably be impressed because of the difficulties of working in deep-seam pits.
I have worked those deep-seam pits, sometimes using gravity haulage. Did it occur to the Minister while he is talking to the miners that if his diktat that economic pits must close had applied to Seafield colliery, it would have had to close? He is bound to have learnt that Seafield colliery is about to become profitable. It is not a clapped-out old pit, but has introduced all the modern technology. There is enough coal in that area for about 100 years, and an entirely new coalfield has been discovered underneath the firth of Forth.
It is a bit much for Mr. MacGregor to come to Scotland —I do not know who advised him or wrote his speech—and to suggest that all the best coal in Scotland is worked out. The hon. Member for Darlington said that we should try to help the new chairman. I said on Second Reading what I thought of the new chairman. There is no doubt that he is yesterday's man. He cannot say that all the best coal in Scotland is worked out. A new coalfield has been found underneath the firth of Forth and at Happendon there are 40 ft thick coal seams. Mr. Cowan, the deputy chairman of the coal board, knows that, because it was he who showed me the plans of the 40 ft thick seams. We do not know how far the Longannet seam stretches. The Canonbie coalfielcl in Dumfries probably stretches to Cumberland. There is ample coal in Scotland, and Mr. MacGregor owes it to the Scottish miners to be better briefed and not to suggest to the public at large that Scotland is a clapped-out coalfield with no reserves. I bitterly resent that.
In Committee several hon. Members mentioned the rate of interest, but it would appear that the Minister has never studied the matter. One would think from his remarks that


every penny given to the National Coal Board was a subsidy, but that is not true. The coal board must pay interest on that money, and in Committee we discovered that last year it had paid £366 million. I remember challenging the Prime Minister about what I described as "Thatcher's law". Since the Government came to power, Thatcher's law has been that if an industry borrows money, even if it pays interest on it, it must be called a subsidy. If that dictum were applied generally, one could say that every section of private industry receives a subsidy. Industries would bitterly resent that, because they must pay the going rate of interest. Some of them receive subsidies—

Mr. Stanley Orme: What about farming?

Mr. Eadie: My views on the Common Market are well known. That must be discussed some other time, but my right hon. Friend is on the ball.
I have often said that the miners' backs are broad, but their backs will be broken by the rate of interest. The loans should be regarded as a good investment for the long-term future of the nation. I have worked out the figures; each pit—before a blow is struck—must pay £2 million in interest. Translated, that means that each miner is paying £35 a week in interest. Who is doing well out of this? What is the sense of Thatcher's law when a publicly owned industry borrows money to invest it in the industry, which is to the benefit of the nation? How can that be described as a subsidy?
When the Under-Secretary replies, I hope that he will say something about the developments at Polmaise. He is bound to have had some briefing. Only this weekend I learned that we were exploring a vast new coal resource in that area but that it may be stopped. That may be just newspaper talk, but the Minister should say what is happening at Polmaise. Will exploration of this vast new coal reserve and the developments associated with it be continued? I believe that at present 200 men are engaged in these development. Those developments mean much to that area of Scotland, particularly for employment, but they will mean just as much to other areas.
Much was said about coal burn during our debate on Report, particularly with regard to the CEGB, but at that time we were not aware of what was happening in Scotland. The South of Scotland Electricity Board announced that it would reduce coal burn from 6·2 million tonnes to 3·8 million tonnes, although the NCB says that it could be 4·8 million tonnes.
Like my right hon. and hon. Friends, I am grateful for the research facilities at our disposal. According to the figures that I have received, a coal burn reduction of 2·4 million tonnes would mean the closure of five Scottish pits and the loss of 4,800 jobs, yet we heard nothing of that from the Minister on Second Reading, even though the Government must have known about the future of coal burn in Scotland.
The argument may well be that Scottish industry has suffered a tremendous recession. Scotland has certainly had more than its fair share of unemployment. We have experienced the Invergordons and the collapse of Singer and Linwood, not just because of lack of demand but because of the policy of recession pursued by the 

Government. We are not talking about the retirement of people over 50, butabout people who will be forced to retire or be made redundant in the prime of their lives.
Even if coal burn was reduced by, say, 1·7 million tonnes, that would still result in the loss of 3,000 jobs —they would certainly be endangered. I am suggesting that the Scottish economy would not stand that. A contraction of jobs on that scale will have an enormous knock-on effect among other Scottish industries such as steel, the railways and light engineering. The Chancellor recently said that he was optismistic about next year. There cannot be much optimism for Scotland if what I have described takes place.
Some Government spokesmen have suggested that there is a possibility that when the condensates at Peterhead are used up and we begin large-scale refining, the coal burn will again be 6·2 million tonnes. That is not what the coal industry wants. If pits are closed, they are closed for all time. One cannot mothball a pit in the same way as one mothballs a factory. I therefore hope that the Under-Secretary will comment on this serious situation.
It has been hinted that the Secretary of State for Scotland would be prepared to meet Scottish Members of Parliament with mining interests along with area officials of the NUM as advisers. The Department of Energy also has a responsibility in this regard, and I hope that Ministers from that Department will also attend. Something must be worked out, because Scotland cannot take any more unemployment. The Government have a responsibility to ensure that something is done.
On Report, the Minister said that he was puzzled about liquefaction. So am I. I read that there would be a 2·5 tonne scheme at Point of Ayr. I read elsewhere that it might be a 1·5 tonne scheme. The only thing of which I am sure is that this will be a laboratory scheme on site, because what was envisaged for liquefaction bears no relation to what I hope will happen at this late stage. The Under-Secretary should spell out exactly what has happened. How will liquefaction be funded, and what contribution will the Government make?
There is more confusion in the House about liquefaction and how it works than anything else. From the comments of some hon. Members, one would think that we were talking about a virgin technology. Not at all. Indeed, we have been working refineries for probably 80 or 90 years. The technique and technology of oil refining is nothing new. We are really talking about the introduction of a new product.
Most refining technology has already been invented. Therefore, we cannot be accused of playing Walter Mitty when putting forward our ideas on refining. The Under-Secretary should try to clear up the confusion, be it in my mind, his mind or the mind of the House. That is important if we are to talk accurately about the future prospects of the coal industry in relation to the new technologies.
I have already referred to some of the exciting developments in coal gasification. From my sources I understand that there may have been a change of mind on the time scale. On Second Reading I said that it was absurd to suggest that coal gasification would not take place, bearing in mind the billions of pounds of investment in our gas-pipe network. Of course we shall capitalise on that investment, and of course the gasification of coal will always be on the agenda. Indeed, it must be on the agenda unless Mr. MacGregor does not believe his own words. Mr. MacGregor said that there was a possibility of being


able to produce 200 million tonnes. But there is not a chance in hell of the coal industry producing 200 million tonnes unless the new technologies of liquefaction and gasification are introduced.
I was at the most recent meeting of the national executive of the NUM, and at the joint meeting between the board and the NUM. We were told that coal from South Africa was being dumped at £12 a tonne. The Minister may talk about being competitive, but I hope that he is not suggesting that, even with the best technology in the world, we can produce coal for £12 a tonne. I remind hon. Members that Britain produces the cheapest coal in western Europe and that its coal may also be cheaper than that produced in other areas.
Another important matter, the vale of Belvoir, has already been mentioned. I was unable to attend the most recent question time involving the Department of Energy, but I was appalled when I read one of the answers that had been given. The chairman of the National Coal Board had intimated that the vale of Belvoir was to go ahead. However, I was shocked by the Minister's answer which was neither specific nor categoric. He said that there were matters of capital investment which the Government would have to examine. The Minister now has the opportunity to make it clear that the necessary capital investment has been released to allow the vale of Belvoir to go ahead.
I have been in touch with Jack Jones, who is the secretary of the Leicestershire miners. Incidentally, there are no better miners anywhere in Britain. That coalfield should have been started many years ago. Anyway, the coalfield is not in the vale of Belvoir. That is a myth that has been built up out of all proportion to the reality. The original idea was that there should be not one but three pits. However, as the coal board and the Leicestershire area miners have been forced to have only one pit, the whole project may start off at a disadvantage given the economics that Conservative Members apply, like desiccated calculating machines. However, it should not start off at a disadvantage, because the Leicestershire miners need those pits—and not just one pit—to ensure continuity of employment in Leicestershire, and to ensure that their skills and talents are still used. It is a pity that a positive attitude has not been adopted towards the start of that coalfield, despite Mr. MacGregor's announcement.
I have tried to raise issues of great moment as constructively as possible, and I make no apology for mentioning, in particular, Scotland. I hope that the Minister will at least endeavour to reply to my points. I assure him that many miners not only in Scotland but in Leicestershire and elsewhere are anxious to know his views.

Mr. T. H. H. Skeet: The hon. Member for Midlothian (Mr.Eadie) always makes a good speech. However, he is inclined to overlook the fact that the liquefaction of coal is not, at present, a practical proposition. If the oil price rises to $50 a barrel and beyond, it would be commercially attractive, but it is not attractive at present. Consequently, in many parts of the world companies have backed away from that proposition. Thus, the Government were right to pull out their contribution to the NCB, or at least to minimise it.

Mr. Eadie: I am sorry to interrupt the hon. Gentleman, but he mentioned me by name and liquefaction is an

important issue. Surely the hon. Gentleman will not fall into the trap of trying to dismiss for ever, or for a long time, the whole question of liquefaction. He must be aware that Lebanon and the middle east are powder kegs. It is impossible to predict what the price of oil will be next year. The hon. Gentleman must also be av,, are that America has only eight years of indigenous oil supply left.

Mr. Skeet: It is all a question of timing. The hon. Gentleman fails to understand that the coal molecule is much more complex than the oil molecule. Oil is easy to refine. However, it is difficult to liquefy coal. More time is required. Many processes are available, such as Lurgi in West Germany, as well as the Sasol plant and project in South Africa. It is a practical proposition to liquefy coal if it is cheap, or if there are defence reasons for it. However, at current prices it is certainly not a practical proposition in the United Kingdom.

Mr. Roy Mason: The hon. Gentleman may well be misleading the House and if so, the Minister could clear up the matter. The hon. Gentleman said that the Government had pulled out of their contribution to liquefaction. Is that true?

Mr. Skeet: I said that the Government had greatly lessened their contribution. made clear what I meant. We are in a world of Alice in Wonderland economics, in which miners are inclined to keep their minds chained to the past. They will modernise their pits, but they will not modernise their approach to life. If production is 125 million tonnes per year and consumption is 110 million tonnes per year, there is at least 15 million tonnes surplus to requirements.

Mr. Kevin Barron: Stocks are increased.

Mr. Skeet: I accept that stocks increase to 58 million or 59 million tonnes. But stocks have to be paid for at the rate of £6 to £7 per tonne, so the liability is increased. Elementary economics teaches us that it is not much good producing a colossal amount of coal if it cannot be disposed of on the open market, or externally. I have often made that point to the House and do so again now. I do not see why the coal industry should be insulated from the rest of the economy.
We have talked about closures and I have a sincere feeling for the miners involved. The steel, shipbuilding, petrochemical and refining industries have been reduced in size. Unemployment has been created because the companies recognise that if they have too much capacity for the market they must tailor it to suit the market. Today, we have learnt that the miner is to be insulated from all that. As I have said, it would be unwise to adopt that approach and I insist that I am correct in being a realist.

Mr. Mason: The industry has lost 24,000 men in the past four years.

Mr. Skeet: Shipbuilding, steel and many other industries have also lost men. Lord Robens closed so many pits under a Labour Government that fewer pit closures may occur in future. We want to ensure that miners receive a fair deal and fair compensation if they are discharged.
West Germany, which has an agreed surplus capacity of 10 million tonnes, has had to cut back. I hope that the number of redundancies here will be much below the figure envisaged. If the 20 best pits in 1982–83 produce coal at an average of £28 a tonne that is excellent, and competitive anywhere. If the 20 worst pits produce coal


at an average cost of £89 a tonne, twice the norm, that is a wasted asset and it creates difficulties for the good pits in north Yorkshire and elsewhere.
We want a strong and tailored industry to meet the requirements both of today and the future. The way to secure that is by selective closures, which go on all the time. I read in The Sunday Timesonly yesterday of three further closures. I understand that between seven and 11 closures have occurred this year. Over the years, closures have been authorised by the accepted procedure. We ask for nothing more but a realistic interpretation.
The industry must be prepared for certain retrenchment in the interests of those good areas of the country. We look forward to the vale of Belvoir— and Selby when the latter overcomes its water difficulties—going ahead with increased production. They will be profitable pits. I understand that the Selby production rate is about £18 per tonne, which is competitive anywhere in the world.
The Bill, a little bit of paper, will cost the taxpayer billions of pounds. Do the miners realise that? It will cost billions and, in my judgment, it will be ineffective. The Coal Industry Act 1980 was intended to make the industry viable by 1983–84. By 1983–84 the subsidies poured into the industry were nobody's business. This Bill is intended to last for two years. In two years' time, we shall return to the House asking for further substantial subsidies.
What has happened in the United States, South Africa and Australia where no subsidies are paid? It is difficult to compete with them, but we do not import much coal, because that is virtually prohibited. When the CEGB attempts to import coal it is told that it must stock it on the continent and dispose of it there.
When we come back to the House in about two years' time we shall need a capital reconstruction. I appreciate the point about interest charges being considerable. I would not mind betting that £500 million will be written out of the NCB accounts. That is the contribution that the taxpayer is making. It is not the Government's contribution because they have no money. They do not print the money; it must come from the taxpayer's pocket.
In the last 10 years, capital investment and grants have totalled over £7 billion. Let us think how that money could be used in another context with more profitable results. The Opposition may be surprised to learn that the capital employed by the NCB is equivalent to £6–3 billion. The rate of return, excluding subsidies, is minus 5–9 per cent. The NCB would be virtually bankrupt but for the fact that the Government provide most of its cash.
Everyone says that the miners do an excellent job and want a strong industry. I have heard repeated speeches along those lines in Committee. The Opposition Benches contain a galaxy of talent and hon. Members will make their speeches later. Perphaps there may be some taxpayers' representatives to describe the reverse side of the coin. The motor car industry does not receive such taxpayers' money, nor do the steel and shipbuilding industries. It is all reserved for the the coal mining industry, where the workers are paid and earn on average £180 a week and receive concessionary coal and all the other advantages. I hope that some of my observations have sunk in at long last.
The right hon. Member for Methyr Tydfil and Rhymney (Mr.Rowlands) said that the nuclear power industry had taken jobs from the miners. I regret that that

is so. When the target of providing 22 per cent. of electricity is achieved, a number of jobs will go, but one must recognise that nuclear power, on base load, is much cheaper than using fossilised fuels. That is to the advantage of people who have to pay the bills and necessary for the success of the industries that provide our exports.
I support privatisation and look forward to when the number of people who can run a pit is lifted from 30 people to 100 people. I do not suggest that the pits overall should be privatised but I am justified in saying that a great number of NCB auxiliaries, for example, Staveley Chemicals, could be parcelled and sold to others. Many of them are not very profitable now but they may be in other hands. The key to the future lies in the innate ability of the miner to persist with his work, in the ability of the management teams—now the soundest for years—and the possibility that in about 15 years the prospects for coal will vastly improve.

Mr. Martin Redmond: I thank you, Mr. Deputy Speaker, for calling me to speak early in the debate.
I agree with the hon. Member for Darlington (Mr.Fallon) about the contents of the Bill. It is a short-term Bill and does nothing whatsoever for the coal industry or, indeed, for this country. If there is to be a repitition, there is an old saying that "if at first you don't succeed, try, try, again." We hope to convince Conservative Members of the validity of our argument.
We have been told that the National Coal Board has a fine chairman. I would not like to think that he was looking after my housekeeping money because I would soon be bankrupt.

Mr. Skeet: Rubbish.

Mr. Redmond: Nevertheless, it is true.
The hon. Member for Bedfordshire, North (Mr.Skeet) keeps mentioning the word "profit". I firmly believe that the industry is not there to generate profit. Its prime task is to meet the energy demands of this country. If one started to introduce the profit motive one would soon be back to the days of exploitation, which would be detrimental to this country. I told the Minister in Committee that what the country needed was a plan for energy based on coal. At no time in Committee was that point answered.
The entire Bill is based on short-term thinking. A Conservative Government have been in office since 1979. We were told that the Conservative Government would bring forth power and drive and would give initiative to this country. One looked for that to be relayed to the coal industry. Unfortunately, that has not come about. I have not yet been to the Department of Energy's ivory tower —no doubt the Minister will be inviting us there before the Christmas recess. In a search for a plan for coal, will the Minister tell us the Department's thinking.
Reference has been made to the proposed grid system from France to this country. What energy flows will come from that grid system and at what time and under what circumstances will the grid system be used? What will be the coal equivalent of the energy flow from that system?
Reference has also been made to the gas industry. When the gas runs out, a conservative estimate is that at


least 100 million tonnes of coal will be needed to provide the gas industry with its basic requirements. If that is the case and if the Department has no alternative plans, what immediate plans are there for the coal board to lay down more than one vale of Belvoir? Selby, the vale of Belvoir and indeed the other few pits that it intends to leave open will not produce 1 million tonnes. As reference has been made to South African coal at £12 per tonne, is it the Government's intention to import coal to meet the requirements of the gas industry? I hope that the Minister will tell us how the gas industry will meet its requirements when gas starts to run out.

Mr. Skeet: If the gas industry has a requirement, I do not think that it will be until the turn of the century or beyond. Why should we make provision in 1982–83 for requirements of the gas industry which are probably two decades away? Those requirements are not with us now, so surely we can economise a little before that time.

Mr. Redmond: I would have expected that type of comment from any Conservative Member except the hon. Member for Bedfordshire, North. He is as aware as any other hon. Member that the industry requires long-term planning. If it does not have long-term planning, it will not meet those requirements. Perhaps we could continue that point over a cup of tea.
A figure of 7 million tonnes of coal imports was mentioned in Committee. It is quite possible that that figure will not be reached. The Minister mentioned a figure of about 4 million tonnes, the same as last year. The figure, last year, was 4·5 million tonnes. That 4·5 million tonnes refers not just to steam coal but to total coal imports, whether coke or briquettes. It can all be produced by the British coal industry. Any imports will obviously reduce domestic demand.
At the end of August the figure for coal imports was 3·58 million tonnes. If that is the case it strikes me that the total figure will be well over 4·5 million tonnes. About 500,000 tonnes can keep a medium size pit open and provide jobs; and every 100,000 tonnes imported means jobs. I am sure that the Minister is a compassionate man and will seek to reduce imports. If I am correct and imports will be higher than the Minister's forecast of 4·5 million tonnes this year, I wonder what reliance can be placed on the other figures that the Department of Energy produces. If I am wrong, I will buy the Minister a pint, and if I am right, I hope that he will sack his advisers in the Department of Energy.
I am an anti-marketeer. I do not like the EC. I have yet to see its benefits for the British people. Perhaps the ardent marketeers on the Conservative Benches will tell us what has gone wrong with the European plan for coal. Leaving aside agriculture, steel and coal have declined and steel imports continue to flow. What discussions has the Minister had in Europe about an energy plan for the future?
A figure of 80 million tonnes has been mentioned time and again as the realistic production figure for the industry to meet current and foreseeable market demand—hence my question about gas. Selby can produce about 10 million tonnes with 4,000 men. Multiplied by eight, that gives a total of 32,000 men. Let us be generous and say that 40,000 men will be required to produce 80 million tonnes. Current manpower stands at 200,000, so that means a reduction of at least 160,000 men. If those figures are wrong, I hope that the Minister will tell us so.
On the Department of Energy's long-term calculations, the industry will need at least 150,000 men, if not the current level of 200,000 men, to meet future needs. I know that the Minister is an honest man, who would not lead the House astray. Will he forecast the manpower requirement during the next few years? It is a frightening possibility that within the next six or seven years 160,000 men may be shed from the industry. When we consider the future requirements for energy from coal, it is frightening to realise that we may not have the manpower or pits to produce it.
If the Department of Energy has alternative plans to meet those targets, be it from nuclear fuel, coal imports or whatever source, we should be informed of those plans now. I hope that the Minister will tell us about the current position in the industry and whether the Department has given guidelines to Mr. MacGregor. It is crucial that the House knows about any guidelines. If there are none, the Minister need only say so; but the House should be aware of the current instructions or advice given to Mr. MacGregor.
The Minister stated categorically that he does not intend to privatise any coal mine in the foreseeable future, which is good news. But reference has already been made to the report of the Monopolies and Mergers Commission. Do the Government intend to privatise everything but the coal mines? The industry has central workshops, which have been rationalised and centralised to meet the industry's demands. Does the National Coal Board intend, on the instructions of the Government, to sell those workshops? I question whether the private sector will want to dib in to any part of those ancillary industries, which are geared to the coal industry. If it does dib in, it could drop a clanger because little of the coal industry will remain intact.
The Bill is about finance, and I reiterate that the industry needs a different financial structure if it is to survive and meet the new demands for energy.

Mr. Hal Miller: It is with some trepidation that I rise to make my maiden speech on the coal industry. I shall, therefore, be brief and, I hope, non-controversial.
I am glad to follow the hon. Member for Don Valley (Mr.Redmond) on his point about demand for coal products to meet future energy needs. I wish to concentrate on the demands of the foundry industry for foundry coking coal. The current assistance on that product will be lifted on 31 December, and I understand that the price will rise to about £122 per tonne. That product is currently available in France at about £80 per tonne, in Belgium at £93 and in Germany at £103. This is a serious matter—

Mr. Redmond: If the hon. Gentleman quotes those figures, he must compare like with like. Large amounts of subsidy are provided on the continent. I agree with his point about the cost of coking coal to the foundry industry. I have tried to make the point that the Department of Energy should come forward with a realistic plan. The Department should take account of the subsidies on imported coal. I regret that we are talking not about longterm future needs, but about short-term policy.

Mr. Miller: I am talking about the needs of my constituents who operate iron foundries that are dependent


on energy costs as part of their competitive structure. I admit that the west midlands and other areas of the United Kingdom have some way to go on productivity. Indeed, Britain ranks ninth out of 12 in the European league, having about two thirds of the level of productivity of the French and German industries. Our production per foundry is of a similar order and relation to the French and German firms.
There are real problems in the foundry industry. We must look for a reduction of capacity even larger than that which has already taken place, and an improved performance. Reduction in capacity has been considerable. In 1979 the industry employed about 72,700 people in about 630 firms. There are now 450 firms with 50,000 people.
The competitive position is important because the industry is faced with an increase of 50 per cent. in scrap prices and also tremendous competition from imports of castings from Spain and the far east. I am not sure whether my hon. Friend the Minister is aware of the difficulties being experienced by the motor industry at the hands of Spanish imports. As an illustration of the problem in the foundry industry, a casting made by a well-known component manufacturer left his works at 100 per cent. fob, went to Spain for use in a model being assembled there, was not required and came back to Britain as a spare part and, thanks to a subsidy, landed at 92 per cent. of the fob price. In face of such unfair competition, my hon. Friend will appreciate the seriousness of the price increase likely to take place if the arrangements with the NCB do not cover a continuance of assistance to the foundry industry on coke prices.
The prospects for the foundry industry are not good because of the technical substitution that is taking place at a rapid rate, with the development of alternative materials in the motor industry as manufacturers look for substitute and lighter materials. There is a long-term effect on the output of the castings industry. It is, therefore, through this transitional period of reduction in capacity and improved performance that assistance is needed.
As for product development to meet technological change, SG Castings in the United Kingdom is about only 20 per cent. of the iron foundry output, which is about half the French level, and we rank eighth out of 17 producers. In the steel foundries, in high alloys, only 6 per cent. of our production is in those advanced techniques. Therefore, the industry has a long way to go. It realises its responsibilities but will find great difficulty in facing a cost increase in the price of foundry coke of the amount I have indicated.

Mr. Peter Hardy: Hon. Members and others reading the Official Report of the debate might question whether the hon. Member for Bromsgrove (Mr.Miller) was making a speech which had relevance to coal; but I recognise that he has maintained a consistent interest in energy prices, and we have frequently found ourselves on the same side when we have debated the enormous problems that high energy prices impose on British industry.
If the unfair competition that the hon. Member for Bromsgrove perceived as wiping out large areas of industry in the west midlands had not been allowed to

wreak havoc in Britain, the coal industry would be more viable today, our power stations would be operating nearer to capacity, electricity and other prices would be lower and the Government would not be facing the appalling problems, social and economic, that high unemployment is creating and will increasingly create.
The hon. Member for Darlington (Mr.Fallon), who has left the Chamber, suggested that hon. Members were not saying anything new. I shall not say much new, partly because I said much of what I have to say on the subject on Second Reading, at which stage the Minister, while recognising my interest and concern, did not respond in detail to the serious points that I made. As those points are now more serious than they were then, I invite him not merely to listen to them but to respond. If he does not do that tonight, I hope that he will take the trouble to respond eventually to the important points that I shall make.
The first issue that I wish to raise is that of acid rain. Last Friday I attended a meeting of the committee of the Council of Europe that is responsible for this and similar matters. I have attended every meeting concerned with acid rain in the last three or four years. The matter is of enormous consequence for Britain — for the energy industries and for British industry generally — and the position is astonishing. It is clear that the Scandinavians, Dutch and Germans will not let the problem rest. I met the German Minister of Agriculture in September. The Germans, Norwegians and Swedes are embarking on detailed studies, and I am not happy about the British response.
There are those in the Central Electricity Generating Board who seem delighted by acid rain. They dislike the coal industry so much that they think that they can pass the blame on to the coal-fired stations, when in fact the situation is rather more sophisticated than they might like the public to believe. I was looking on Friday at some detailed figures which I trust Conservative Members on that committee will one day present to their colleagues. The position is that we could make a necessary—it will become increasingly necessary — response to the Scandinavians who are worried about our industrial effluent. We could do that a great deal less expensively than some people in the CEGB seem to suggest. I saw figures showing that while there are people in Germany making a similar claim, in reality we could make an enormous contribution, for one quarter of the sum of which the Minister may have been advised.
Another aspect causes me great concern. We have heard much about Mr. MacGregor's wonderful salesmanship. Apparently he is a master at recognising and pursuing markets. I have not heard a cheep from the National Coal Board in recent months about a relevant development concerning acid rain. At Grimethorpe in Yorkshire, not far from the constituency of my right hon. Friend the Member for Barnsley, Central (Mr.Mason), the NCB has made enormous strides in establishing the modern and effective use of coal by fluidised bed combustion, which provides far less pollution by sulphur emission.

Mr. Mason: I started it.

Mr. Hardy: I intend to pay tribute to my right hon. Friend for his efforts in the matter. Indeed, I am glad that my hon. Friend the Member for Midlothian (Mr.Eadie) is also in his place, as I shall mention him shortly.
The fluidised bed development represents a major step forward in fuel use. It would make a powerful contribution


to Britain's international standing because, if we develop the fluidised bed, our neighbours will see that we mean well and that we are complying with our international obligations. My hon. Friend the Member for Midlothian, when an energy Minister, watched, supervised and nursed that development. He and my right hon. Friend the Member for Barnsley, Central, who started it, are entitled to join me in asking the Minister to ensure that this splendid development is properly known and exposed and that our European neighbours are told about a splendid achievement by our nationalised coal industry. That, and the point made by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr.Rowlands), should be properly developed. We must encourage the proper use of energy in Britain, and to that end, the Government must take the initial step by giving greater encouragement to promote coal burn through the conversion of boilers.

Mr. Skeet: rose—

Mr. Hardy: I shall not be as childish as the hon. Gentleman and refuse to give way. Indeed, I always welcome his contributions to our debates.

Mr. Skeet: Will the hon. Gentlemen give way?

Mr. Hardy: Certainly, but first permit me to introduce the hon. Gentleman. The hon. Member for Bedfordshire, North (Mr. Skeet) has always presented the unacceptable face of the Conservative party in energy debates. But we should miss him if he were not here, and I am glad to give way to him.

Mr. Skeet: I do not accept the hon. Gentleman's implication, though I rise to tell him that he is on a good point—

Mr. Hardy: I am well aware of that.

Mr. Skeet: —but there are two difficulties. First, we do not have a commercial fluidised bed combustion power station yet, and we are not likely to have one for a number of years. I hope that it can be developed quickly, but meantime we do not have one. Secondly, assuming that one is built, that will be one new power station. What shall we do with all the other power stations that cannot be converted to fluidised bed combustion within 10 years?

Mr. Hardy: That was a more relevant intervention than we are accustomed to receiving from the hon. Gentleman. Nobody with sense would dream of saying that today's problem of acid rain will go away by 1984. I quoted some figures in Paris on Friday to show that western Europe could reduce SO 2 and nitrogen oxide emissions by 4 per cent. or 5 per cent. per year on average over seven, 10 or 15 years. If such progress were made, every country, including the Scandinavian countries which are sensitive about this matter, would be relieved. The hon. Member for Bedfordshire, North must not suggest that we are demanding that this be achieved overnight. However, certain things, including a generous development of the boiler grant scheme, can be done swiftly. That would mean more experience of using fluidised beds. Conservative Members and I know that we have been waiting a long time for the Minister to approve combined heat and power district heating schemes which, if based on fluidised bed combustion, would be a remarkably powerful demonstration of our sense of responsibility and assist the NCB to maintain coal burn.
No one in the coal industry or living in a mining community wants pollution to continue. The nationalised

coal industry, having established and developed new methods of modern combustion, should be encouraged by the Government. I am astonished that the wonderful salesman who is now chairman of the NCB has not been trailing up and down Britain and throughout the rest of the world selling the technology developed by his industry. because that technology promoted the use of coal. I hope that role was included in his terms of reference when he was appointed.

Mr. Mason: I hope that my hon. Friend will extract from the Minister when he replies the information that, contrary to what he said earlier about fluidised bed cumbustion techniques at Grimethorpe, that development is proceeding and is proving to be a success. There is a European interest in the project. We want the Government to give that project all possible encouragement.

Mr. Hardy: I agree with my right hon. Friend. That is a matter of urgency. I was stressing its importance by referring to the problem of acid rain, to which the Government must respond. This project provides a powerful avenue through which to respond. I am amazed that the NCB has not said more in relevant and firm terms about this matter. If anyone from the National Coal Board reads Hansard, I trust that he will ask Mr. MacGregor, if the Minister does not, to say a word or two in support of that project and to use this trump card to which he referred in his supposedly superb salesman's guise.
On Second Reading, I talked about the Atkins report and the need to develop a CHP district heating scheme. The hon. Member for Bedfordshire, North seems to believe that this will be many years away. The Minister will be aware that there is a proposal for such a scheme in the south Yorkshire area. It would be a useful development in that region. Although Sheffield and Rotherham may not have featured very highly in the Atkins ranking, I believe that the Minister will accept that the Atkins report suggested that Sheffield and the south Yorkshire area could be included in such developments.
Hon. Members who might be tempted to talk about pits losing money should pay heed to an important and significant point to which I referred on Second Reading. The hon. Member for Bromsgrove referred to the steel industry. I was disappointed that the Minister did not pursue that matter. I recognise that the debate on Second Reading ranged widely and that he could not comment on all aspects in one speech. I hope that the Minister will take up that point.
I believe that in 1973 — I do not want to be excessively foolish in attacking the Secretary of State for what happened 10 years ago—the present Secretary of State for Energy was the man who called for a massive growth in the steel industry. It was envisaged that we would produce 30 million tonnes of steel a year. The Minister may be as disappointed as I am that we did not reach that target. However, hundreds of millions of pounds were spent on pits, especially in the south Yorkshire area of the National Coal Board, to ensure that we produced coal of metallurgical quality to meet the steel requirements of the increased market that was envisaged.
I could take the Minister to pits in Yorkshire — he may already have seen some—where scores of millions of pounds were spent in an attempt to improve the quality of coal. Unfortunately, with Mr. MacGregor then chairman of the British Steel Corporation, in partnership


with the present Administration, the output of the steel industry collapsed. There was a drift towards the use of the electric arc furnace, which dropped to wretchedly low levels of perfomance, reducing the coal requirements for power generation. However, during the past decade, the NCB built up its capacity to serve a 30 million tonne-plus steel market, but then had to retreat from that aim. Vast sums of money were invested in all pits to meet the demand for steel, and then that money was wasted. However, it was not entirely wasted. It meant that coal from the south Yorkshire collieries is cleaner and has a lower sulphur content, and therefore is less of a pollutant when burnt in power stations. Pits do not receive the same amount per tonne from coal as utilised now as they would have done if the steel market had not contracted.
I do not want to see a single colliery in south Yorkshire —where vast investment occurred so that output could meet the needs of the planned steel market—threatened or closed because it cannot meet from its production the enormous burdens of investment that accrue when pits were designed to serve the envisaged steel market. That is a problem, and I should like the Minister, at the end of the debate or soon afterwards, to assure us that no colliery in the Yorkshire coalfield will be threatened or closed because it cannot pay from its current yield for the investment that has been killed by history and the combination of the policies of Mr. MacGregor and the Conservative party. The Secretary of State is partly responsible for those circumstances, and I do not believe that he should duck that responsibility. I hope that he will examine that matter with a reasonable amount of sympathy.
Conservative Members from Bedfordshire, North or the more salubrious areas of Britain — I know that the Minister is a Yorkshireman, which suggests that he might be more sympathetic to our view—seem to believe that pits ought to be closed with abandon. We are almost in a macho contest to see which Minister or hon. Member can urge the closure of the greatest number of pits in the shortest time. The hon. Member for Bedfordshire, North seems to be offering dissent. If he reads Hansard, he will see that only one Conservative Member showed a glimmering of sense.

Mr. Skeet: The hon. Gentleman is suggesting that the Conservative party wants extensive closures. We feel that the closure of a certain number of pits will improve the viability of the market.

Mr. Hardy: Hon. Members have referred to 20 pits. I do not know how many the hon. Gentleman wishes to see closed, but it will certainly be fewer than I do. The hon. Member for Bedfordshire, North, may be prepared to see the closure of a few more pits than some of his hon. Friends who have participated in the debate.

Mr. Eadie: Seventy thousand men.

Mr. Hardy: Some Conservative Members want to bring the level down to 70,000 men in a few pits, such as the Selby complex.

Mr. Francis Maude: From where does the hon. Member get the figure of 70,000—except that I know that it was passed on by one of his hon.
Friends? It is not a figure, as far as I know, which has any basis in fact. It is only in the hon. Gentleman's imagination.

Mr. Hardy: We have heard some Conservative Members of Parliament demanding an abrupt and immediate slaughter. There are probably some Conservative Members who think that a reduction to 70,000 would be excessively generous. Much depends on whether Conservative Members have any miners in their constituencies. Some of them may have in this Parliament, but I doubt whether they will have any, even if there is not a contraction of the industry, when the next Parliament is formed. If there are any miners within the constituency of the hon. Member for Warwickshire, North (Mr.Maude), they may have learnt some sense since June.
I represent a constituency which has been given a new name. However, there was a constituency known as Wentworth in 1945. I understand that that constituency was created in 1922. It is very different now because there are fewer pits in the area. There are five pits in my constituency, but there may have been 50 small pits in the 19th century. The pits are part of an old coalfield, but within my constituency there are some modern pits with long reserves.
I represent an area which is accustomed to pit closures. Pits have closed when they have become exhausted, and no one has objected. I can think of two collieries in my constituency which closed without objection from me because it was accepted by everyone, after proper consideration, that closure was appropriate because the pits were exhausted. However, it is foolish to propose that pits should close because they are currently losing money.
One of the pits in my constituency—one at which three generations of my family worked—lost quite a lot of money last year although it has substantial reserves. It now has two 300-yd faces. The hon. Member for Bedfordshire, North who knows a little about energy, might recognise that now that an especially long face is in production the pit could become profitable. As I have said, it lost money last year. That being so, Conservative Back Benchers would have closed it by now and deprived the public and the industry of any opportunity to mine coal successfully and effectively in an area in which unemployment, in a real sense, is 30 per cent. or more.
The hon. Member for Bedfordshire, North talked about pits being closed when a Labour Government were in office, and he referred to the 1960s when I was not a Member. The unemployment rate in many areas of south Yorkshire was 3 per cent. at that time, but it is now almost 30 per cent. If the Government's figures were not fiddled, I should say that there would be justification for suggesting that the rate is over 33 per cent. Only 15 per cent. of school leavers in the metropolitan borough of Rotherham secured normal employment this year. Against that background, I have nothing but anger and considerable contempt for Conservatives from comfortable areas of Sussex, Surrey and Kent who get a good deal more than we do from local authority rate disbursement.
I am extremely angry when those from comfortable areas in the south of England say that we should close pits and increase our unemployment from 30 per cent. to 40 per cent. If we did that, we would destroy hope. There would be very few apprenticeships and few opportunities for 16-year-olds leaving school in my constituency. There would be little opportunity for them if the National Coal


Board reduced its manning levels to those that now prevail in the British Steel Corporation. Unemployment in parts of the Yorkshire coalfield is now higher than in parts of Northern Ireland.
I have never advocated violence and I never will. I have never sought to stir up trouble in society, for it has troubles enough. However, if the Minister pursues the line that Conservative Back Benchers are urging him to take and shuts the pits rapidly when there is no economic alternative, the strains imposed on our coalfields, which have burdens enough already, will be intolerable. I trust that the Minister will ensure that the NCB is financed sufficiently to maintain its present capacity and will ensure also that communities are sustained within the areas where our coalfields are to be found. It is clear that Conservative Members have not thought of those communities during the debate.
The Minister probably accepts, even if Conservative Back Benchers do not, that the NCB is facing considerable difficulties because of the appalling recession with which Britain has been afflicted. He knows as well as I do that the pace of extraction of oil and gas is now so swift that our reliance upon coal will grow rapidly in the 1990s. It would be extremely foolish of the Minister to accept the advice of Conservative Back Benchers that we reduce our coal industry's capacity to an extent which would imperil Britain's future before we reach the 21st century.

Mr. Neil Hamilton: I am sure that certain parts of debates on the coal industry are an acquired taste. I hope that I shall grow eventually upon some Opposition Members who took exception to my previous attempt to introduce what I thought was some light into the proceedings. As my previous speech was so well received, I thought that I might at least finish it off this evening. I promise not to extend it as I did previously, but that rather depends on the number of times that I am interrupted by Labour Members. I am always happy to respond to their interventions.
The hon. Member for Wentworth (Mr.Hardy) talked about Conservative Members who come from comfortable seats in Sussex and other areas. I do not come from a comfortable seat in Sussex. My constituency forms part of Cheshire and there are areas within it where there are considerable industrial problems. There is a good deal of chemical production in my constituency and ICI has had its problems. I understand the problems of industrial decline, especially where an industry seems unable to survive in the world market on its own merits. I speak in this debate with no sense of glee at the state in which the coal industry finds itself. I am sure that all my right hon. and hon. Friends have the well-being of the coal industry at heart as a long-term industry.
That is not to say that we take the view of many Labour Members that the coal industry can be preserved for ever at its present size and in its present state. Much depends upon the ability to sell coal at competitive prices. In future the industry may be able to sell more of its product than it can now. We are passing through a world recession, a fact that does not seem to have percolated through to the minds of Labour Members. They speak as though the industrial difficulties which the country faces, whether in steel or elsewhere, are isolated and that Britain is insulated from world events. That is not right and other countries face similar problems.

Mr. Barron: What about the farmers?

Mr. Hamilton: The hon. Member for Rother Valley (Mr.Barron)—the understudy of the hon. Member for Bolsover (Mr.Skinner)—talks about farmers. There are farmers in my constituency and I agree with the hon. Gentleman that the common agricultural policy is a scandal and that something must be done to reduce the waste that it brings about. I was one of 27 Conservative Members—I say this with some trepidation, as my hon. Friend the Member for Watford (Mr.Garel-Jones) is on the Government Front Bench—who did not vote with the Government against the Opposition's amendment to a motion to take note of several EC documents relating to the CAP. In this respect I am consistent. I oppose scandalous waste in agriculture and I oppose scandalous waste in the coal industry. I wish that the hon. Member for Rother Valley and his hon. Friends would be equally consistent.
Both Front Benches are in agreement that the Bill should be given a Third Reading. When both Front Benches are in agreement about anything, the alarm bells should start ringing and the taxpayer should be concerned about what will happen to his pocket. When we consider-the purposes behind the Bill and the history of it. which has been so well delineated by my hon. Friend the Member for Darlington (Mr. Fallon), who alas is no longer in his place—I am sure that he is enjoying a good dinner, as I look forward to doing in due course—are we prepared to agree to continue to pay huge subventions to the coal industry to maintain it in being at a size which is hopelessly uneconomic?
I freely admit that my personal practical experience does not lie in the coal industry. I have as much personal practical experience of it as the hon. Member for Merthyr Tydfil and Rhymney (Mr.Rowlands), who I understand has not worked in the industry. But that should not debar us from taking part in debates on the coal industry. I was surprised by the response to my previous speech on this subject. Opposition Members—the right hon. Member for Barnsley (Mr.Mason) was one of them—seemed to take objection to my quoting figures, sources and references from various documents. Having been brought up in the law, I have always thought that an argument ought to be supported by facts verified by independent sources, and reinforced by statistics. I do not therefore regard that as a demerit in my speech. The generalised assertion and emotional sentimentality in which some right hon. and hon. Gentlemen have indulged, on the other hand, will add nothing to our proceedings.
The hon. Member for Wentworth told us that Conservative Members wished to close down huge swathes of the industry. He talked about reducing the number of mine workers to 70,000, about hit lists of pits and so on. So far as I know, no one on these Benches wishes to see the industry reduced to such a level. However, the present state of the industry is not supportable. The costs that it imposes on the rest of British industry are at least as great as the social costs imposed on communities by the closure of uneconomic pits. Where uneconomic pits are closed, it is right and proper that there should be generous redundancy schemes — they are provided for in the Bill—and that the sums spent upon them should be increased. But we cannot oblige profitable industry to carry this millstone round its neck for ever.
There are no coal miners in my constituency, but there are 68,700 taxpayers. They are also electors, and they have a great interest in the proceedings of the House, especially when we pour hundreds of millions of pounds down the pits. The most important question has not been asked by many hon. Members: should we increase the borrowing powers of the Coal Board? Should we increase the subsidies, as is proposed in the Bill? I personally have grave doubts about the wisdom of doing so. There is a coal mountain in this country that is just as large as the butter mountain, the wine lake, the olive oil lake or any other stock of surplus products in the European Community. I take the same view of that surplus as of other surpluses.
The November edition of the Coal Board publication
Coal News states:
Present pithead stocks of £24 million cost more than £100 million to the Coal Board in interest payments alone. Every extra million tonnes costs another £7 million in stocking costs and interest charges on top of the £40 million it costs to produce the coal.
The hon. Member for Midlothian (Mr. Eadie), who is unfortunately not here to hear my reply, maintains that interest payments do not count, but that argument is unsound.

Mr. Rowlands: rose—

Mr. Hamilton: I am sorry to speak while the hon. Gentleman is attempting to interrupt me. I hope that the House will bear with me.

Mr. Rowlands: The hon. Gentleman has referred to the absence of my hon. Friend the Member for Midlothian (Mr.Eadie). He has a nerve. He behaved in a gravely discourteous manner on Second Reading, when he made a speech and did not wait to listen to the reply to it. He is recognised throughout the House as being gravely discourteous by nature.

Mr. Hamilton: I am sorry if I offended the hon. Member for Merthyr Tydfil and Rhymney by responding to the request of the right hon. Member for Barnsley, Central who said that my speech was so disgraceful that I ought to withdraw from the precincts immediately.

Mr. Rowlands: This guy is going to have to learn a lesson.

Mr. Hamilton: I am always ready to learn a lesson.
Some of the industry's problems are caused by the mounting interest that it has to pay. Interest is a cost, just as manpower and capital equipment represent a cost. I am about to purchase a house in my constituency, the better to perform my functions in this House. If I ask the hon. Member for Midlothian to lend me the purchase price he will be gravely offended if I say, "You can write off that money now, because I do not intend to pay you either capital or interest." Taxpayers' money is being invested in the coal industry, and they expect to have a return on it, as they would if it were used in any other way. We could invest it in American Government stocks and receive a handsome return. I am not suggesting that we do that, but we could invest in other profitable ventures outside the coal industry.
Even during the present overtime ban, pithead stocks are increasing. There is a glut of coal in the world, and this country cannot insulate itself from that.

Mr. Geoffrey Lofthouse: There is a coal glut and a coal mountain. It has been reported that stocks are increasing even during the overtime ban. Does the hon. Gentleman agree that it is a scandal to allow that fuel to stop at the pithead when thousands of old people will suffer from hypothermia, and that some of those stocks should be given to them?

Mr. Hamilton: I do not believe that the stocks should be given to them. It is equivalent to writing off investment in the way that I have mentioned before. It is a cost on the Budget, and we cannot take the view that there should be unlimited expenditure on the provision of social items, even though they may be desirable. Old people should not suffer from hypothermia in the winter, and the Government have provided grants to prevent that.
The problem of coal stocks is becoming worse. Production is 10 per cent. greater than consumption. The problem is becoming worse because investment is expanding the industry's productivity potential faster than it is being reduced by the closure of uneconomic pits. There will be 23 million tonnes of extra production by 1987. Since 1974 the closure rate has resulted in the loss of about 16 million tonnes a year, but new production has increased by the same amount. We have contributed to the problem since the publication of "Plan for Coal". The industry must sell more coal, and we are all in favour of that, whether it be in this country or abroad. To do that, coal must be competitively priced. The average cost of production of deep-mined coal in this country is about £38 per tonne whereas the world price of coal delivered in Europe is about £33 per tonne and falling.
A great deal has been said about subsidies for European coal producers. The hon. Member for Houghton and Washington (Mr.Boyes) asked about that in July. The answer in the Official Report shows that taking investment and operating subsidies together, the United Kingdom provides more financial support to its coal industry than any other country. We subsidise investment in the industry whereas elsewhere in the Community, foolishly I believe, they subsidise operating deficits.
In addition to increasing sales by better marketing, we can improve the demand for coal and, therefore, reduce the problem of uneconomic pits and provide more jobs for miners, by improving productivity. "Plan for Coal" envisaged that we should increase productivity by 4 per cent. per annum, but in 10 years we have only increased productivity by 4 per cent. overall. I do not blame that on the miners. I do not take the view that miners are lazy, far from it. My family has been involved in the industry for too long for me to take that view.
We need a sensible policy to close pits which are uncomfortable to work in, lose most money and hold back the industry's productivity record. We should expand in new mines such as Selby and other productive areas. There has been a great deal of emotion expressed about pit closures. It is nearly a year since the Select Committee on Energy produced its second report on pit closures, and it alluded to the various problems to which I have referred. The Committee reported:
It is for the Board to manage the industry and plan for its future in the light of circumstances as they are in the real world —rather than as they were perceived in 1974 or as the Board…might wish them to be today.
That self-evident truth is reality today. We must turn our minds to pit closures. The Committee also said:


There can be no doubt that the very high costs of this marginal and, at least in the short term, surplus capacity unfavourably distorts the coal industry's financial position, and imposes a considerable drain upon public funds.
It is in the industry's long-term interests that the worst loss-making pits be closed.
The worst 12 per cent. of output in terms of operating costs and losses costs us £275 million a year. In 1982–83, as my hon. Friend the Member for Bedfordshire, North (Mr.Skeet) said, the 20 most efficient pits produced coal at an average cost of £28 per tonne and the 20 least efficient produced coal at an avearge cost of £89 per tonne when the average selling price is £40 a tonne. For every tonne of coal produced in south Wales, £12 is lost. For every tonne of coal produced in Scotland, £4·50 is lost and for every tonne of coal produced in the north-east of England £3·50 is lost. That represents bloodletting in the industry. We cannot allow it to continue indefinitely. The industry will accumulate thousands of millions of pounds worth of debt. Until that debt of taxpayers' money is written off, the burden of interest payments will continue to mount—until the problem becomes utterly insoluble.
Although tonight I will not oppose the Bill's receiving a Third Reading, if, in two years' time there have not been significant improvements in the NCB's record—I hope that the new chairman will contribute to improvements and marketing—and if the board asks for yet more money to fund its deficits, there will be considerable opposition from many Conservative Members. If that is taken as a slight warning to the Government from a very junior Member, I am aware of my impertinence. Nevertheless, it is with great sincertity that I tell the Government on behalf of the taxpayers in my constituency that we cannot go on forever in this way, and we certainly will not.

Mr. Ray Ellis: The coal mining industry needs the Bill if it is to continue to operate. There are apparently some people who, in spite of the facts that have been presented, continue to insist on thinking that the industry is the recipient of taxpayers' largesse. That is just not true and the record must be put straight time and again.
Coal mines and coal miners have always been misused. When I started about 45 years ago, before the second world war, the pits had been run down during the capitalist trade cycle depression in the 1930s. The best coal was taken first, the poorer areas being disregarded so that it was more difficult to develop them later. Money that should have been ploughed into development was not forthcoming, yet everyone knew that the war was coming and that the capacity would be needed. When the war came the industry was much worse off. Not only were fewer miners called upon to produce more coal, they were short of the steel, iron and wood that was needed to support, maintain and develop the pits. By the end of the war, the industry was more or less flat on its back.
The inevitable fuel crisis that followed the war showed clearly that the years of neglect and incompetence on the part of mine owners were the reason for nationalisation. It was not a measure of Socialism. Indeed, after the 1945 general election, Winston Churchill is reputed to have said:
The coal owners have for long been a millstone round the necks of the Conservative party, and now they have sunk us.
In 1946, in the face of insatiable world demand, the
NCB was forbidden to take the easy profits that were there

to be taken. Conservative Members should recognise that and get it through their skulls. The NCB was instructed. instead of taking the profits that were readily available in an insatiable international market, to work on a break-even basis.

Mr. Peter Lilley: Will the hon. Gentleman explain to us whether that is why we had a coal shortage at the time?

Mr. Ellis: The hon. Member for Bedfordshire, North (Mr. Skeet) talked about simple economics. Perhaps the hon. Member for St. Albans (Mr. Lilley) should also have a lesson in simple supply, demand and price economics. If one intervenes in a capitalist market and makes imperfect competition by artificially reducing the price, it is inevitable that one creates insatiable demand. That is why the price mechanism is supposed to regulate supply and demand. Perhaps that message will get across one of these days. Perhaps my hon. Friend the Member for Don Valley (Mr. Redmond) will explain it to the hon. Gentleman over a cup of tea.
In the first 15 years of nationalisation, because the NCB could not charge realistic prices and was instructed to sell coal artificially cheaply to reconstruct British private enterprise, which had been deprived during the war, it has been reliably estimated, and not contradicted, that British coal was underpriced to the tune of £5,000 million. That calculation was made in 1960. Imagine what that amount of money would be in today's terms.
When the next capitalist depression came along, we had 20 million tonnes of coal in stock, fuel prices became depressed and — surprise, surprise — the rules were changed overnight. When the free market price was high, profits were forbidden. When it was low, we were told to behave like any other business, and henceforth any capital investment had to be provided through borrowing at extortionate interest rates.
The £5,000 million at 1960 prices that the NCB could have had in the bank, had it been allowed to behave like a business when prices were buoyant, would have enabled the industry to invest out of revenue. I am sure that Conservative Members will agree that that is good capitalist practice. Instead, the burden of borrowing requirements has put the industry firmly and completely into the hands of those usurers in the Treasury. Once that happens, there is no escape. The debt burden, which was totally unnecessary, has become so huge that the industry cannot afford to make the modest advances that will be needed for the civilised welfare of the work force in 1983. Conservative Members should dwell upon this fact. It is hard to believe that all the clean water that goes underground in 1983 has to be humped on the miners' backs. There is no civilised sanitation, no water closets and no means by which they can wash hands underground. The miners must eat their sandwiches with hands which become filthy. Yet in 1983, when we must spend millions of pounds pumping mucky water up, we cannot spend a few million pounds pumping clean water down.
A miner must work and walk on all fours, but that is no justification for him having to tolerate insanitary conditions which would be a disgrace to a 16th century cattle shed. We are told that conditions must be as they are because the NCB cannot afford to pay a few bob due to the interest burden that it has been pushed into by the recurrence of the capitalist trade cycle. No sooner is a pit


booming, than it is back in slump again because of capitalism and its mentors, who are a series of antagonistic Conservative Governments. We must tackle the roots of the problem, if we are to solve it. That means getting rid of Conservative Governments and abolishing the capitalist system.

Mr. James Wallace: I shall not follow the hon. Member for Derbyshire, North-East (Mr. Ellis) down the path of the history of the coal industry, on which he is more expert than I shall ever be. Like the hon. Member for Tatton (Mr. Hamilton) I do not have a coal mine in my constituency. Nevertheless, that is where the similarity ends. I do not agree with him that the Bill will put taxpayers' money down the drain, or down the pit, as he described it, and that it would give the taxpayer no return. At the conclusion of his contribution he said that he spoke with sincerity. That is surprising, because he had already said that he would support the Bill. If he is sincere, and he believes that taxpayers' money will go down the drain, his duty as a legislator is to have the courage of his convictions and to oppose the Bill.
However, that is not the view of my right hon. and hon. Friends in the Liberal and Social Democratic parties. Although the Bill does not go as far as we would like it to do, we support it because we realise that it is essential for the coal industry to get the level of support proposed in it.
When the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) opened the debate he mentioned the difficulties facing the coal industry. Although those of us who sat in Committee did not always agree with the Under-Secretary's replies, we recognised his sensitivity to many of the problems that were raised during our debates. It contrasted with the rather jaunty way in which the Secretary of State for Energy opened the Second Reading debate, which, had one not been aware of the difficulties in the coal industry, might have led one to believe that it was in a buoyant state.
The coal industry is in difficulties because of the lack of demand caused by the recession and by the increasing replacement of coal-generated electricity with nuclear power. Sizewell has already been mentioned and I shall not discuss nuclear safety further. If nuclear power generation is cheaper than electricity generated through coal-fired power stations, it is only marginally so because at present we can buy uranium very cheaply. It is only about 10 years since the western economies had a collective cardiac arrest when oil prices quadrupled. We should be shortsighted if we depended on a fuel source that is cheap and appears to be secure, because that may not always be the case.
There must always be a major role for coal in meeting Britain's energy needs. In many of the debates in Committee and on Second Reading it was said that we have coal reserves for 300 years, but our coal will last for 300 years only if we have a sensible view on pit closures. As the hon. Member for Midlothian (Mr. Eadie) said, once a pit is closed it is difficult, and sometimes impossible, to reopen it. The pit is liable to flood, and unacceptably dangerous levels of gas build-up. If pits are closed for

purely economic reasons today—pits that may well be economically viable in future—we might bring forward the date when our coal reserves run out.
The hon. Member for Tatton said that it would be in the long-term interest of the industry to close 20 pits. But which 20 pits should we close? The 20 least viable pits this year are not necessarily the 20 least viable pits of last year, or those of next year. The long-term interest of the country would be served better if we proceeded with a policy of pit closures that will ensure that the maximum extractable reserves are made available to future generations.
Clause 2(3) relates to the withdrawal of grants to promote the sale of coal to the electricity boards and the hon. Member for Midlothian mentioned the crisis in Scotland. In Committee the Under-Secretary of State assured us that that grant would be subsumed in the overall deficit grant, and that negotiations were taking place between the National Coal Board and the South of Scotland Electricity Board about longer-term contracts for the take-up of coal from Scottish mines. The impression that I gained from the Minister's reply was that the present downturn was only temporary and was principally due to the use of gas condensates at Peterhead. Perhaps the Minister will comment tonight on the fears expressed in many quarters in Scotland that when Mossmorran comes on stream, the coal industry will not necessarily make up the ground that it lost because of Peterhead.
The Committee paid considerable attention to pit closures. It would appear from clauses 3 and 4, which deal with grants in connection with pit closures and payments to redundant workers, that some pits must close. It is generally accepted in the House that when pits become exhausted, or when they reach a stage where safety standards are no longer good enough, they must be closed. However, it is regrettable that the atmosphere pervading the coal industry at present is one of fear that a substantial number of pits must be closed. That fear could be dispelled by the Minister if the Government adopted a more encouraging and positive tone.
Although it is accepted that some pits must close, the announcements will not be met with so much fear if they go hand in hand with reassurances from the Government, backed by sufficient financial assistance, that old capacity will be replaced by new capacity, that there will be a programme of investment, and that new technology will be introduced to make mining safer and to make existing pits more efficient.
As this Bill goes some way towards that aim, I welcome it. However, it does not go far enough. Not only should we provide financial support to the coal industry, but we could provide even more support if there were a general turnround in the Government's economic policies, which have led to a great reduction in the demand for coal, and which have led the coal industry even deeper into financial troubles. Only with such a turnround in policy, and only when Britain's economy is growing again and there is more demand for coal, will the coal industry have a more assured future.

Mr. Kevin Barron: Although, like the hon. Member for Orkney and Shetland (Mr. Wallace), I support the Bill, I do not think that it goes far enough to help the coal industry keep its head above water or to bring on stream new capacity for future use.
Investment in new capacity over the last 10 years has not been sufficient. In 1974, "Plan for Coal" said that about £1,400 million was needed for investment in the coal industry. Three years later, in 1977, when "Plan for Coal" was updated, it was estimated that £3,150 million would be needed for that investment, because it was realised that investment costs would be higher than expected. At the present time, at 1977 prices, the figure should be in the region of £6,500 million.
Investment in the coal industry since 1979 shows that such sums have not been obtained. The only mine in which the Government said that they would invest money was the new Asfordby mine in the vale of Belvoir. Three years ago, the NCB talked about three pits in the vale of Belvoir which would employ 7,400 men, but in the last fortnight the chairman of the NCB gave the go-ahead for investment in only one pit employing just over 2,000 men. That demonstrates the lack of investment in the industry at present. Therefore, the borrowing powers in clause 1 ought to be increased.
At the time of the revision of "Plan for Coal", it was said that expenditure ought to be about £400 million a year at March 1976 prices. At January 1983 prices, that expenditure would now be about £883 million a year.

Mr. Maude: Does the hon. Gentleman accept that the levels of demand anticipated in "Plan for Coal" were about twice the level of demand now? Should not that be taken into account when considering the current level of expenditure?

Mr. Barron: I shall comment on that later.
Although at January 1983 prices expenditure should be about £883 million, NCB expenditure was only £740 million in 1982–83. That again falls far short of the figures in the updated "Plan for Coal" in 1977, and even the increased borrowing capacity envisaged in the Bill will not enable the NCB to achieve the investment targets to which I have referred.
Any borrowing under clause 1 will inevitably mean higher interest repayments. Everyone seems to think that money pumped into the coal industry never comes back, but I remind the House that in 1982–83 the NCB repaid £366 million to its borrowers. About 95 per cent. of all NCB borrowing comes from the Government. Therefore, money on the scale that I have described will eventually be returned to the public purse.
My hon. Friend the Member for Midlothian (Mr.Eadie) talked of interest amounting to £2 million per pit or £35 per coal miner. Each Monday morning the miner must earn that £35 before his pit can become profitable.
Clause 2 takes away the Secretary of State's power to pay certain grants to the coking industry and to the CEGB. We can therefore expect deficit grants on a larger scale than at present. The subsidies received by western European countries are far higher than those in Britain. Deep-mined coal in Britain is subsidised by £4·20 per tonne. In Belgium the figure is £98·56 per tonne, in France £68·9, and in Germany £24·87 per tonne. If we had half those massive subsidies, our deep-mined coal, which is produced very cheaply, could be given away. Of course, no one sees the logic of that. We are selling the British coal industry short by limiting the grants that should be given to the coal industry.
Perhaps clauses 3 and 4 are the most important. We should consider the cost to public funds of putting an end

to the British coal mining industry. The Monopolies and Mergers Commission report took a narrow look at our mining industry and considered the profitability of pits and so on. It did not look at the broader issues of the national interest, or consider having a national energy plan. and it did not compare the financial structure of the industry with that in other western European countries.
The great weakness of the British coal industry lies in the fact that it does not receive the massive subsidies of its competitors in western Europe. The Monopolies and Mergers Commission report suggested closing between 10 and 12 per cent. of what are called "uneconomic pits". The NCB submitted evidence to the Monopolies and Mergers Commission suggesting that the figure should be about 95 pits, or between 70,000 and 100,000 jobs in eight or 10 years' time. It has been said that no one is talking about massive job losses in the industry, but in 1981–82, 12,000 jobs were lost and in 1982–83, 10,200 jobs were lost. Thus, more than 22,000 jobs have been lost in two years, so that just does not make sense. The Government should come clean. If they have been in collusion with the NCB through the Monopolies and Mergers Commission report, they should tell the House exactly how many jobs they envisage will be lost to make the industry economic.
Of course we know the cost of keeping uneconomic pits open. In the National Coal Board's submission to the Monopolies and Mergers Commission, it said that in 1981–82 it would cost the British taxpayer £221 million in one year to keep open the uneconomic pits. Thus the cost of the closure programme envisaged in that evidence would be about £2·2 billion over 10 years.
The cost of job losses in the industry has been considered before. As the hon. Member for Tatton (Mr. Hamilton) mentioned, the NUM submitted evidence to the Select Committee on Energy about the cost of those job losses. On 8 June 1982 a written answer from the Minister of State, Department of Employment, said:
The average cost to public funds of each unemployed mineworker is now estimated to be £7,188 per worker during the first year of unemployment, and £ 6,326 during the second year of unemployment. The estimates are based on the assumption that each mineworker remains unemployed for the whole of the two-year period."—[Official Report, 8 June 1982; Vol. 2.5, c. 41.]
The Monopolies and Mergers Commission report backs up the last sentence. It recognises that the mining areas are experiencing high unemployment. Indeed, my hon. Friend the Member for Wentworth (Mr. Hardy) mentioned the high unemployment in the Rotherham metropolitan area where my constituency is situated. Unemployment there is astronomical and higher that it has been since the war.
According to the NUM paper the figures took into account the calculated cost to public funds—
the direct cost to the Government of making a mineworker redundant, from the loss of social security contributions by employer and employee, the loss of income tax, the loss of indirect tax revenue from consumption of goods and the payment of welfare and unemployment benefits, after adjusting for indirect taxes paid out of these benefits…These calculations did not include the cost of redundancy or transfer payments but the Union showed that in addition there would be further costs arising from the knock-on effect of redundancies in supplying industries.
That is the case. There will be a knock-on effect. The National Coal Board calculation, based upon 70,000 jobs, is that it will cost not, as the Minister said in Committee,


between £30,000 and £35,000 but nearer £64,000, taking into account the loss to the Exchequer of the items that I have just mentioned.
We must appreciate what the rundown of the British coal industry costs public funds and the taxpayer. According to the NUM's calculations it will cost over £4 billion in 10 years compared with the NCB calculation that it will cost £2·2 billion to keep the pits open.
If Conservative Members want to look after the taxpayer and do not want to waste public money, they should go back to the Department of Energy and do the calculation again. They will find that they will waste more taxpayers' money than they will save if they increase the number of closures. The public interest will not be served if they do that.
In the last 20 years the coal mining industry has been run down by agreement and after consultation with the unions. That is happening now. I was concerned at what the director of the north-east coalfield said at the weekend. He said that when the Herrington colliery is closed in July next year some of the 700 employees there will not be offered alternative work. That is a great departure from what has happened in the last 20 years.
I am a Yorkshire miner who comes from a Durham miner's family. My father came from Yorkshire in the 1950s. Miners were always worried when a pit closed. I hope that the Minister can tell the House whether the practice of the last 20 years is at an end and whether mandatory redundancies are a fact.
In Committee the Minister described two main policy objectives. They were that the National Coal Board had to earn a satisfactory return on assets after payment for social grant and that it was up to the National Coal Board to maximise its long-term profitabilty by securing those profitable sales on a continuing basis in competition with other fuels.
If those are the Government and NCB criteria, they will rip up the "Plan for Coal" agreed by Government and the unions and the NCB in 1974. The Government said that the total deep-mined output in 1985 would be approximately 120 million tonnes. In 1982–83, it was 105 million tonnes—a shortfall of 15 million tonnes. It is obvious that we will not make up that 15 million tonnes in two years. It is not good enough for Conservative Members to say that the National Coal Board has not been running the coal industry down since 1974 by 3 million to 4 million tonnes a year because we are not meeting the overall targets that were set. Why should we get the blame for the loss of 8 million tonnes a year from the coking market after Ian MacGregor took over as chairman of the British Steel Corporation? Conservative Members appear to be suggesting that, because of the present high stocks of coal in this country, miners should take the blame for the loss of the coking market for steel. Conservative Members appear to suggest that the efficiency of members of the NUM is to blame. That is not on.
Conservative members are looking at the basis of the NCB since 1946 in a different light altogeher. The Coal Industry Nationalisation Act 1946 laid down specific guidelines for the National Coal Board to follow. It charged the NCB with making available
supplies of coal…best calculated to further the public interest in all respects
with securing

the safety, health and welfare of persons in their employment
and with utilising
the benefit of the practical knowledge and experience of such persons in the organisation and conduct of the operations on which they are employed".
Conservative Members are now saying that the 1946 Act should be changed. If that is the case and if the coal board is not to be looked upon in the way set out in 1946, it would be more honest for the Government to bring legislation before the House to change it, rather than by starving the coal board of funds and attacking it.
Conservative Members often say that there is a good deal of distrust in the industry. I should like to conclude by reading a quotation that has been brought to my attention by what were once called the "moles of Whitehall" and who are now accepted as the social conscience of Whitehall. The quotation is a leak from a Cabinet Committee on economic strategy of Tuesday 23 October 1979. I do not know whether the Under-Secretary of State for Energy was present at that meeting. The article is marked "Confidential" and the Prime Minister was present at the meeting. The article says:
But a nuclear programme would have the advantage of removing a substantial portion of electricity production from the dangers of disruption by industrial action by coal miners or transport workers.
Is it not a coincidence that the Government came to power early in 1979 and by October were presiding over meetings to take away the power of the National Union of Mineworkers? If the industry distrusts the Government, it has been given every cause. I hope that, after we pass the Bill, it will not be long before we come to the House again to get the help that the coal industry needs to meet the energy requirements of the nation.

Mr. Michael Welsh: The Coal Industry Bill is important to my constituency and to the nation. Several right hon. and hon. Members have suggested that the £6 billion is a piece of window-dressing borrowed from the Coal Board to help it produce more efficiently in the coming years. That is correct. The most vital issue is the great lack of investment in the industry in previous years. Investment in the 1960s went only to coal face production. Shafts and pit bottoms did not receive investment. Obviously, a great deal of investment is necessary to get the coal up the shaft. The money is on loan to the NCB because of the inefficiencies of Governments over many years.
It is vital to remember that investment improves safety for those working underground. Investment in machinery on the coal face has, thank God, meant fewer fatal accidents. If such investment saves lives, that is good. My father was killed in a pit in 1934, so I fully understand why investment is so important to improve safety conditions. Investment is needed both underground and at the pit top.
I am sure that the Minister is aware of deferred payments which are important to the industry. For example, for such pits as the vale of Belvoir, the industry cannot borrow money now and pay it back from current coal production because that pit will not produce any coal for five, six, seven or more years. Will the Minister favourably consider deferred payments for the NCB so that it can pay back the money as the coal is spewed out of the vale of Belvoir at the expected rate?
Thorne colliery in my constituency is currently closed, even though it has good seams. I do not expect it to be


opened tomorrow, but I expect it to be opened some time in the future —I hope sooner rather than later. Millions of pounds of investment will be required to develop the colliery, which has 10 ft thick seams of coal of the best quality in Britain, if not in Europe. Deferred payments could be used there to ease the burden on the NCB.
The Bill obviously envisages the closure of some pits because it makes allowances for redundancies. I hope that the Government realise that, in effect, there is only one shaft in Britain—that is, all the shafts put together. If a shaft is closed, that much less coal can be produced overall because there is a limit to shaft capacity. If, by some stroke of luck, the economy should turn, it would be difficult to produce the coal required for industry.
Schumacher, the Rhodes scholar and great economist, said in the 1960s that by the end of this century Britain would need more than 200 million tonnes of coal because other fuels would be running out. Yet coal at the end of the century will not be coal as we know it—it will be coal oil or gas. Whatever it is, it will be needed to keep the economy moving.
When decisions are taken about pit closures we must remember not only the social costs involved, but that the closed capacity will never come to the surface again. In addition, because each tonne carries a certain unit cost —such as paying for the NCB headquarters in London —every time a pit is closed the unit costs on other collieries will rise because they have to carry a larger share of that burden. The burden on the industry becomes greater because the money must be paid back by fewer units and therefore unit costs increase.
The Government of the day, on behalf of the nation, will the means for the nationalised industries to have money to invest. As they will the means, so they will the way also, and it never ceases to amuse me when people say, "We are giving the industry millions of pounds," because the money is being borrowed and must be paid back. I recall a letter that was sent by the Chancellor to the EC when the Conservatives came to office in 1979. That letter stopped the NCB from borrowing from the EC. That is why the £6 billion that we are discussing is necessary — because the NCB cannot go anywhere except to the Government to borrow.
The Government will not allow the board to borrow on the open market. I am not suggesting that that should be the case, but if Conservative Members argue that the answer to so many of our problems is to be found on the open market, they should accept that the industry could borrow money more cheaply that way, and if it were allowed to go to the EC, it could borrow it even more cheaply. In other words, we are discussing this measure because the industry has no other choice; it is the way in which the NCB obtains money to invest to obtain coal for the nation. While that is the situation, we shall continue to need measures of this sort. In the way that, say, ICI borrows from industry, merchant banks and others, so, whether it likes it or not, the coal industry must borrow from the state.
I shall be brief because other hon. Members wish to speak and we do not want to keep the House all night discussing this subject, although it would not worry me, because of the importance of it, if we debated these issues until 10 o'clock tomorrow morning.
When the upturn in the economy comes, the nation will need all the coal that it can get. If pits are closed and production is cut to a minimum, we shall have to pay gold

for coal from other countries. Sterling is a convertible currency and we shall have to pay in gold for that coal. If the present Government have no plans to secure an upturn in the economy, the Labour party has plans for the economy to improve, and then we shall need all the energy available to us. If, as I say, we create a situation in which we do not have enough energy, particularly coal, for that upturn, we shall have to buy coal from abroad and our balance of payments problems will lead us into another slump.
It is vital to ensure that we have enough coal to supply the energy we need. To that end, we need measures of this kind so that the NCB can invest in the industry. We also need deferred payments so that we can go ahead with new developments and produce the coal that the nation needs. Then the industry will be in a position to pay back to the nation the money that it borrows to invest so as to obtain the coal that the nation needs.

Mr. Geoffrey Lofthouse: I do not want to cover ground that has already been covered. I was privileged to be a member of the Standing Committee and to have an opportunity to speak on Second Reading. Many of the points that I would have raised have been mentioned, so I shall refer the House to the social costs involved in what we are debating, for throughout our discussion of the Bill that aspect has been neglected.
Many, especially new, Conservative Members, lack experience of industry, even if they can understand a balance sheet and adduce a persuasive argument about the economics of the issue. There is more to this problem than economics. We must agree on short-term prospects. Apparently, there is an overcapacity in coal production. About 50 million or 60 million tonnes of coal is piling up. The Government have taken panic measures because of market fluctuations. They are not attempting to look at—

It being Ten o'clock, the debate stood adjourned.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Coal Industry Bill and the Town and Country Planning Bill may be proceeded with, though opposed, until any hour. — [Mr. Donald Thompson.]

Orders of the Day — COAL INDUSTRY BILL

Question again proposed.

Mr. Lofthouse: We cannot measure the cost of pit closures in money alone. If a pit is closed, it means the loss of a way of life for mining communities.
Apart from social costs, pit closures leave behind other scars. If the coal board closes a pit, it leaves behind the dereliction that has gone on for many years for someone else to try to correct. Slag heaps have not been properly thought about for many years. People must put up with being thrown out of work. I concede that the present compensation arrangements appear to be attractive. It is understandable that so far men have been glad to accept: compensation without "kicking over the traces".
Although the Government and the coal board easily got away with closing pits when men accepted it, there is now a completely different ball game. This week, the coal


board is contemplating compulsory redundancies, and I hope that the Minister will respond to that point. I believe that in two years, we shall be debating a similar Bill to give the coal board further borrowing powers. My worry is that that will cushion the blow to men under 50 years of age. We are contemplating taking away the livelihoods of men of 50—and it appears that the age will be reduced—and saying that they are no longer needed. I foresee the problem simmering in the middle east creating a similar position to that experienced in the 1970s.
At the weekend, I went through my archives and found a headline in the Daily Herald of 3 October 1947 which read:
Two-Ways Plan for Extra Coal
Every day or Saturdays.
The nation was appealing to the miners to work overtime to pull it out of the mess caused by the shortage of energy supplies. The hon. Member for Bedfordshire, North (Mr. Skeet) may believe that that is a joke as he sits back waiting for his knighthood, about which we heard something last weekend. Those lads, who had not long left school, but who had responded to the nation's challenge at that time, are now being told that they are no longer needed.
The longer-term policy has not yet been spelt out. If we need coal to be mined after we have closed the pits, will we run to the miners again and ask them to work throughout the week, Saturdays and Sundays included, to pull us out of our energy troubles? I know that the miners would always respond, but there is a point at which butchery turns to the breaking of bones. The limit has been reached in the mining industry. The Government can no longer insist that if a balance sheet looks black, everything will be all right after the pit has been closed and that that which is left behind does not matter.
When I intervened earlier in the debate I was not being humorous or cheap when I talked about the supplies of energy that are piled up in Britain. We have stockpiled about 60 million tonnes of coal, yet we all know that old-age pensioners will die from hypothermia this winter. That is inhuman. What sort of a nation are we when we allow vast stocks of fuel wealth to accumulate in the knowledge that many of our old people will die from cold? We know also that thousands of tonnes of the stockpiled coal will deteriorate. The Government should be telling the coal board to release some of the fuel to safeguard our old people this winter.
In recent years the coal board has not paid sufficient attention to alternative markets, to liquefaction and to the gasification of coal. Not enough time has been spent on securing markets. The board has spent all its time and energy considering how it can run down the industry to a level at which it becomes a commercial exercise. Coal mining can never be purely a commercial exercise. That is impossible.

Mr. Skeet: Is the hon. Gentleman saying that it is an essential service?

Mr. Lofthouse: Do Conservative Members realise what makes a pit economic or uneconomic? A pit can be made uneconomic in a few weeks if that is desired. If the coal board decides that it wants to shut a pit, it will have no problem doing so. One answer is to stop sending down

a new conveyor belt for a week or two and to let the old belt start to break. Production will stop. It is the easiest thing in the world. What I call the black fields—

Mr. Alec Woodall: We can bring the analogy up to date. The marvellous, brand new super-pit at Selby will never be economic as long as it produces water instead of coal.

Mr. Lofthouse: If that pit continues to produce water, that will be so. We sincerely hope that it will soon produce coal.
The north Yorkshire area is blessed with the Selby coalfield, for which we have great hopes. That pit will employ 4,000 men and produce about 10 million tonnes of coal. The north Yorkshire coalfield is currently producing about the same amount, but it employs about 16,000 men. If the present north Yorkshire capacity is to be replaced by the Selby coalfield, what will happen to my 12,000 men? Shall we tell men below the age of 50 that there is no more work for them? Many Conservative Members have privileged backgrounds. I wonder whether they really understand — especially the younger men among them—the social consequences of telling people at the age of 50 that there is no work for them. Those men have spent a lifetime slogging their guts out in the bowels of the earth, and they have been prepared to do so in order to provide their familes with a less than reasonable standard of living.
The bag of gold will not last long, and there is more to life than gold. Minds must be occupied. Many miners have never been trained for anything else. They have not had time for recreation or hobbies. After eight hours down the mine, they have been too tired to do anything else. They will not be ready to cope with so much time on their hands.
I understand that there is pressure from the three mining trade unions for further talks with the coal board and the Government early in the new year. The sooner the better. The uncertainties should be brought into the open. The policies that the three mining trade unions will put to the coal board and the Government are the right ones. After the rumours of savage pit closures involving 70,000 men —whatever the figure, we have heard it in the past two years — it is time that the Government and the coal board came clean with the unions and told them clearly how they envisage the size of the industry, how many jobs will be lost and what will happen to those who lose their jobs. It is easy for us here, with our salaries, to make policy, to dictate and to tell people in their forties that they will not work any more. That is not right, as Conservative Members must know. Our energies must go towards finding a way to maintain the jobs of the lads in the mining industry.

Mr. William O'Brien: I am glad to have an opportunity to speak on Third Reading. I sat through the Second Reading debate on 15 November hoping to speak, because, when I was elected on 9 June, I was employed in the mining industry. I was a member of the National Union of Mineworkers. Conservative Members freely admit that they have no experience of the mining industry. They have no experience of mining communities, because they represent the stockbroker belt. I have been involved with mining all my life. I have studied


the hazards to ensure that safety regulations are adhered to, and I feel that I can make a constructive contribution to the debate.
One must support the Bill because of its provisions. However, I support the opinion expressed by other hon. Members that it does not go far enough to support the industry. Not many hon. Members come from the pits, but those who do have expressed anxiety about the fact that the Bill's provisions are only short term. We must have long-term planning if we want an industry that will meet our energy requirements. A great deal has been said by hon. Gentlemen about overproduction. They say that we should reduce production to meet demand. We have explained how we would dispose of some of the surplus stocks.
In my constituency a great deal of anxiety is being expressed about the increase in open-cast mining. We have talked about the environment, but there is no greater blight on the environment than open-cast workings. We could reduce output without harming the industry. It has been said that if a mine is closed and shafts are sealed, energy is lost for all time. If an open-cast mine is not worked, it can be resumed when demand increases. We could reduce output by 10 million tonnes by reducing the amount of coal produced by open-cast mining. I ask the Minister to take that on board, because if a census is taken in an area where open-cast mining is proposed, he will find that 100 per cent. of the population will object to the proposals. By reducing the amount of open-cast mining we do not harm communities and we help maintain employment in deep mines.
There has been a great deal said about the need to reduce manpower. At the pit in which I worked before I came into the House, manpower was reduced from 1,800 to less than 500 within two decades, because the seams were exhausted. The men left the pits and found jobs in other industries because they were disappointed about the way in which they had been treated and the way in which the colliery had been butchered. I fear that the present chairman's proposals to deal with pit closures will have similar repercussions.
I hope that we shall enjoy a spirit of comradeship from the new chairman when people are being made redundant. I asked in a previous debate whether the Secretary of State would assure us that people under the age of 50 will not be made redundant compulsorily. That assurance was not forthcoming. Like my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) I fear that young men who have developed a skill that no other industry can use will find themselves without work. I hope that we shall not fail to take advantage of that skill but will use it for the benefit of the nation.
I hope that the Minister will assure us that there will be no compulsory redundancies. Unless we have some information and the chairman of the NCB is given a directive, he might act in the same way as Cromwell, and destroy mining communities.
As my hon. Friend the Member for Pontefract and Castleford said, it is easy to make a pit uneconomic. I kow that from experience of the colliery where I have worked all my life. We can produce as much coal as any other pit in the country but we cannot get it out because we are starved of the capital necessary to improve the shaft. We work from a shaft that was sunk in the 19th century. No money has been spent on it to make it larger or more viable. We can produce the coal at the face as well as

Selby or any other colliery but we cannot clear it out. If such pits were not starved of capital, they would become economic overnight.
When Conservative Members talk of high and low-cost pits they are really talking of investment. Money has been spent on the low-cost pits and none has been spent on the high-cost ones. The record should be put straight. It is easy to make pits uneconomic. Before embarking on a programme of pit closure there should be a full inquiry to discover why some pits are uneconomic. I can say with my hand on my heart that 99 per cent. of the time they are uneconomic only because they have been starved of capital.
We have heard much of Selby and how it is to be the jewel in the NCB's crown because coal will be produced there in greater volume and by fewer men. I am sorry to tell the House that one of my constituents who worked at Selby had a fatal injury last week because of the high-powered machinery, not because of a fall of ground or a collapse at the coal face. That machinery is used in confined spaces. If that is to be the price of reducing the number of men employed to produce the coal, we should think again. If employing a few extra men in the pits in Selby means that lives can be saved, let us do that. The price is too high if we do not. We should review manpower in some of the pits, starting at Selby.
When the Prime Minister was questioned about the increase in gas prices, we were told that because the reserves of gas will soon peter out and there will not be many reserves in the near future, the price will reflect that situation. Therefore, people will be driven away from using gas. We could talk about nuclear energy as an alternative, but the only real and safe alternative is coal. We plead for the development of the coalfields. We could take every ounce of workable coal out of every pit. Once pits are closed, that is the end of it. I plead, together with my hon. Friends, with the Government to ensure that every ounce of workable coal is worked. If people want to talk about the economics, let us start at the beginning and look at where the capital has been invested.
When a pit is closed there are not only psychological consequences for those employed in the industry and their families, but further ripple effects. Young men will be made redundant unless something is done, and there will be no hope of further jobs in mining communities. In October I attended the retired miners' annual tea and social in Rothwell, which is part of my constituency. Rothwell colliery closed last week. The 300 old people who attended that social function were told that that would be the last occasion when they would have a get-together. Therefore, there are many social consequences on community life after a colliery closes. Provision should be made to buttress people against such anti-social measures. That should be considered.
Many people could benefit from the coal that is stocked at the pit head. We should allow them to obtain fuel, or allow fuel to be delivered to them from the stocks. Any hon. Member representing a mining constituency will be familiar with this. In my constituency many widows of mineworkers should receive concessionary fuel, but because some were on the wrong side of the line when their husbands died or left the pit, they do not receive it. If they could obtain that fuel, those unfortunate people could have much more comfort this winter. There is no doubt that if we start to distribute some of the coal stocks to those who


need extra warmth this winter, it would not make much of a dent in the stocks, because those people realise the value of coal and would use it economically in their homes.
If we are to consider the Bill properly and in good faith, the points that have been made by my hon. Friends tonight must be considered by the Government.
I have seen privatisation in the coal industry, and it was surprising how the materials and equipment flowed to the private contractors to enable them to continue working, while those employed by the National Coal Board were denied equipment and materials. Heaven forbid that privatisation should be extended. We have enough of it in the National Health Service; we do not need it in the mining industry. The Government should reconsider any proposals to privatise the industry, because it would destroy the coal-producing areas now owned by the coal board.
I hope, too, that the chairman of the coal board will honour some of the promises that he made, including the promise that men made redundant at one pit will be allowed to transfer to another. If the Secretary of State takes on board some of the points made by those who have been at the front end of the industry — those who represent miners and mining communities—it will be in the best interests of the industry and of the nation. I hope that the Secretary of State will give serious consideration to some ideas, and that they will be implemented in the near future.

Mr. Dennis Skinner: I appreciate the fact that the Opposition might wish to keep the debate on this Bill going until 2 o'clock in the morning, which would provide us with the ideal opportunity to stop the Government's business tomorrow, but I believe that Mr. Speaker will accept the closure of the Third Reading debate before then.

Mr. Rowlands: There is another Bill.

Mr. Skinner: I was just testing the water. I do not know whether my hon. Friends can keep this debate going, but the Town and Country Planning Bill, which will come next, could continue for a while.
I am pleased about the fact that many hon. Members have spoken in the debate, which shows that there is much concern in the mining industry at present. One feature of the debate is that not every hon. Member who has spoken represents National Union of Mineworkers' interests. Certainly, one hon. Member represented the deputies' union, and my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) comes from a side of the industry that is close to management, although he is not a member of management. It is significant that some conciliation is beginning to develop among the NUM, the National Association of Colliery Overmen, Deputies and Shotfirers and the British Association of Colliery Managers. That is a welcome sign of strength, which should suggest to the Minister that he is not just dealing with the NUM now.
When pits were closed in the past, especially in the 1950s and 1960s, it was relatively easy to shift people from one region to another. Now, as exemplified by the Herrington closure announced this week, we are talking of people under 50 with no job at all. Not only will people

working down the pits and on the pit top be without jobs, but managers, under-managers and many others associated with the higher echelons of management now realise that they cannot be transferred as part of a management development team. Very few management jobs are left, and as a result BACM, the management union, is now allied much more closely with the battle to save the pits.
We have had a series of speeches from Labour Members with an interest in the mining industry —including my hon. Friend the Member for Midlothian (Mr. Eadie), who is secretary of the miners' group of Labour Members—informing the Government that although the coal board needs this money, it is chicken feed compared with the problems faced by the industry.
As my hon. Friend the Member for Rother Valley (Mr. Barron) pointed out, in 1982 the industry had £366 million in interest charges hung around its neck before a tonne of coal was dug. It will be more this year, simply because interest rates have not fallen at the same pace as inflation. The gap between 5 per cent. and 9 per cent. still exists, but in some cases money is borrowed at 10, 11 or 12 per cent. As a result, the interest charges on the coal board this year will be greater than in 1982.
Each time the Government talk about "Plan for Coal", a figure of £7,000 million rolls off their tongue. That should be set against the massive amount that must be repaid each year and which was not envisaged at the time of "Plan for Coal". It must also be examined against another form of investment. Since they came to power, the Government have invested £12,000 million abroad rather than invest in the pits to which my hon. Friends have referred. It seems that the figure could be even higher as a result of the lifting of exchange controls.
We are not talking about handing out money to the NCB, the NUM or anyone else. This borrowing powers Bill is all about putting further debts around the coal board's neck. It will mean at least £3 on every tonne of coal produced from the pits that still exist. Each pit will have to pay back £2 million in debt to begin with, despite what we have heard from the Institute of Directors' and estate agents' spokesmen on the Conservative Benches. Remarkably, during the last hour there have been seven or eight speeches by Labour Members but none by Conservative Members—

Mrs. Edwina Currie: We are waiting for you.

Mr. Skinner: All I know is that the Coal Board is expected to pay interest charges of £2 million per pit—a load that is too big to carry.
The Minister should do what Governments have done previously for other industries. He should write off a large part of that debt this year. He will not solve the problem without taking off about £1,000 million. The Government do not have to set any precedent, because not only public sector but private sector industries have been bailed out time and again. I think, for example, of Slater Walker. The Secretary of State, as he now is, was not still in command of Slater Walker when it went under. However, a Labour Government had to bail it out.
Tonight we are talking not about unit trusts, but about the lives of miners and about those who have been in the industry for 30 or 40 years and who now have no prospect of a job. We are talking about whole communities being shattered. The social consequences of the 1950s and 1960s


are even now littered around us. Once miners were industrial gipsies, travelling from Durham to Nottingham, and so on. But now there are no jobs. Not long ago, 400 young lads went to a colliery in my constituency looking for jobs. Only 20 of them found jobs, as a result of the policy to close pits. Everybody who is thrown out of work represents a cost of £5,000 to £7,000 per annum on the Exchequer. Therefore, the policy is economic lunacy. The Government want a massive dole queue so that they can put the fear of death into those who still have jobs. They are introducing a wages policy through fear.
The Government should write off most of that debt. They should pick up the coal industry, just as they picked up Slater Walker and Keyser Ullman. The right hon. Member for Taunton (Mr. du Cann) knows all about that latter company, because he was chairman for some time. In the 1970s all sorts of industries were helped, yet that Institute of Directors fellow, the hon. Member for Tatton (Mr. Hamilton), talks about putting too much money into the industry. What about the Falklands? We are told that 400 families in the Falklands will need £3 billion, yet we are talking about 400 families at one pit and about whole villages losing their identities and being cast aside. We are not asking for £3 billion. A £1,000 million write-off would do for a start.
I saw some figures the other day for Northern Ireland. I do not deny that there is a problem. The figures are authentic, and the Government know them. In the 13 to 14 years since the troops went in, it has cost £10,000 million to keep the Northern Ireland economy running at about 70 per cent., with unemployment in some places, such as Strabane, as high as 50 per cent. Miners' families will want to know about that. If the Government can find £10,000 million in 13 years for just over 1 million people, it is time that they gave more consideration to the regions and peripheral areas, which by and large — with the exception of areas such as Nottingham—represent most of the coalfields. It has been said that the whole of Scotland is being closed down. That is one of the Common Market's plans. It wants to make closures in the peripheral areas.
Mr. MacGregor would be quite happy to carry out that plan. He knows all about leaving casualties behind. He did it at Amax. We heard all the talk about this great whiz kid MacGregor, doing a job in America. But in 1982 that so-called booming concern was left with debts of $292 million. That is the legacy of Mr. MacGregor, the so-called whiz kid, and that is his plan for the coal industry, just as it was for the steel industry.

Mr. Woodall: Whiz kid?

Mr. Skinner: That is how he was described. As my hon. Friend knows only too well, when Mr. MacGregor was brought to Britain, he was supposed to galvanise everything that he touched. It cost £50,000 for him to visit Bilston Glen colliery in Scotland. Everything had to be made spick and span. It was a whitewash job. The cage that he went down in was painted, but the other one was not. About 100 items had to be examined to see that they were in order. He was treated like royalty. A whole shift was kept waiting for one and a quarter hours. They lost all that work and nothing was said. Yet, at Monkton hall when the workers were late by five minutes, they were locked out for weeks.
Who are the Tories to talk about losing money when MacGregor can be involved in a loss of that kind? It is the 1960s all over again. I was going to refer to that, but it has been dealt with adequately.
The Liberal spokesman, the hon. Member for Orkney and Shetland (Mr. Wallace), tried his best to say that we have support from Orkney and Shetland. I hope that he does not think for a minute that he is speaking for the alliance, because its members do not agree with the Liberals about phasing out nuclear power. They believe in the exact opposite. In the 1960s, when my hon. Friends were battling to save the industry from predators such as Lord Marsh and others who wanted to shut the mining industry down, the Liberal spokesman said, "We don't want any pits to be kept open. We should close them all."

Mr. Alistair Burt: Will the hon. Gentleman give way?

Mr. Skinner: Just for a second, that is all.

Mr. Burt: The hon. Gentleman is busily examining the records. Does he agree that since the war pit closures have taken place faster under Labour Governments than under Conservative Governments?

Mr. Skinner: I worked in the coal industry from 1949 to 1970 and I can speak only from experience. In the years up to 1964 in the area south of Clay Cross, 24 pits were shut by Tory Governments. I do not relieve Labour Governments of blame, but between 1964 and 1969 when the stocks became low, people appreciated that the policy was all wrong, the oil lobby was beginning to fade from the scene and only seven pits in the Derbyshire coalfield were shut. Those are the figures from Derbyshire, which can be examined. I believe that the same is true for Lancashire and one or two other coalfields.
I know that the hon. Member for Bury, North (Mr. Burt) is only a whippersnapper of a kid, but he should know that from 1964 the Tory Government were in power. That is when 20 or more pits in Derbyshire were closed. The pattern was the same, by and large, throughout the coalfields. My hon. Friends will come to the same conclusion. The Labour Government had to be told at the historic meeting in Central hall across the road when Will Paynter put it on the line. As a result, the Labour Government realised that they had to change their policy. The coal stocks had been reduced to a low level and from then on few pits were shut, and then only because they were exhausted.
The real problem is not just the pits. The coal mining industry and associated industries such as steel, railways and textiles are interdependent. The Government must be prepared to boost the economy. I am not asking them to change course. I could ask them, but that is not the point that I am trying to get across. A 10 per cent. increase in manufacturing production in the next 12 months would mean that seven or a dozen pits would not have to be closed because their coal would be needed. That interdependence is causing tremendous hardship.
Employment in the steel industry has been halved, with 105,000 redundancies in four years. About 20,000 railway jobs have gone, metal production is down by 10 per cent., textile production is down by the same percentage and hardly any public sector housing is being built. All that, with pit closures, is part of what I call the "Thatcher revenge". That applied after 1972 and 1974, but, from the


Prime Minister's personal point of view, from February 1981 when she had to send the Secretary of State at the time, the right hon. Member for Guildford (Mr. Howell) —she sacked him later—to the Dispatch Box to say that they were changing the policy of pit closures and of imports and exports. But it was always temporary—it was only for a short period. Now we are seeing the revenge.
The Government have had a good deal of media assistance in the process. We all understand that. I think that when the Government talk about pit closures we should tell the Minister from the Floor of the House that it is time he told Mr. MacGregor to have a method study in Hobart house. Let us have one there. Never mind about efficiency in the pits—productivity has increased by 14 per cent. during the past four years while manufacturing production has fallen by about 16 per cent. during the same period—let us have a method study in the office of the Secretary of State for Energy. Let us see how many seconds it takes to walk from the desk to the gin and tonic cocktail cabinet.
My hon. Friends have described the conditions for miners in the pits. It is no laughing matter. There is a world of difference between the way Mr. MacGregor, Ministers, hon. Members and those who pontificate about the future of the mining industry lead their lives and the way that those who go down to the bowels of the earth or work at the pit top screening coal and so on lead their lives. Wages in the industry have already fallen to twentieth position in the league table. Underground miners need £30 a week to catch up. The low paid have had a cut in wages of £16 during the past four years. That is all part of the pit closure programme, the unemployment programme and the economic policy of the Government.
I have had a look at the shift premium payments. In the eight years since 1974 and "Plan for Coal", for all workers they have gone up from £1·40 to £21·50. For miners they have gone up from £1·40 to £4·20. That cannot go on forever. As I said to the Minister before and to the Prime Minister earlier, why cannot the Government treat the mining industry as they treat the oil industry? Everyone knows that it makes sense to get as much oil out of the North sea as possible, even if it is only small pools. It makes sense to get it. What do the Government do? They say to the oil companies, "We know that it will be terribly uneconomic to do it, so we shall give you tax relief to help you get at those little pools when the big ponds have gone." We are not complaining about that. It makes sense to get all that energy.
Why do the Government not do the same with the marginal pits? It is hypocrisy for the Government to allow it for the oil companies but not for those mines that are becoming relatively uneconomic for a period. As my hon. Friends have said over and over again during the debate, one cannot find a pit that is uneconomic for more than about three years. They are few and far between. Which uneconomic pits does one pick off? I remember that Westthorpe pit was to be closed because of high ash content. Then, suddenly, two years later, stocks of coal fell, and Westthorpe produced high ash coal and it was mixed with something else. It has been kept open ever since. But now, closure is back on the agenda. Why is Westthorpe to close? High ash content again.
The Government can close a pit by any method they like. They can ensure that it has more water than it should. They can ensure that the gas intake is greater than it should be. They can ensure that they send in machinery that does not work and sometimes they will send in experimental machinery which causes the pit's losses to be even greater. They try all those schemes. At the end they say, "We want to close the pits because the miners are working in terrible conditions and we feel sorry for them". That, too, is hypocrisy.
The Government may disregard all our attempts but oil production will hit its peak in 1986 and then begin to taper off, notwithstanding all those pools that will be found because of the tax relief—the marginal oilfields. If that is the case and if we are scared stiff about nuclear development — God knows, a great many people are scared stiff about what is happening with nuclear power—is it not sensible for us now to change the policy and ensure that we produce all the coal possible? That means a write-off of debts and a subsidy for British coal on a par with our western European neighbours.
Opposition Members come from the real world—not the world of the Institute of Directors or the world that makes money out of someone else's ribs day in and day out. The mining industry is an honest industry. Opposition Members know that with a majority of 144 against us, we cannot change matters by marching into the Lobbies. But the miners are aware of that fact also, which is why the overtime ban is solid throughout the coalfields. The miners appreciate now that they must fight back.
I accept that last year was not the greatest year for miners' solidarity, but that is now changing. We report back to our coalfield areas every week, and we know that the overtime ban is solid. Indeed, it is being suggested that it will last for ever. Our power is out in the coalfields. as it was in 1967. When it shows itself, we will ensure that we win.
It is time that the Government viewed the mining industry from a different angle. They must recognise the need to get the coal from the ground, as they recognise the need to subsidise agriculture up to the hilt. If they can find £20,000 subsidy for every farmer because they want to maximise food production, why can they not do that for coal? They must change their policy so that Britain can compete with western European countries.
We currently produce the cheapest deep-mined coal in Europe, at £38 per tonne. If the Government follow Opposition suggestions, the mining industry will be on its way to the 200 million tonnes that the country will eventually need.

Mr. Allen McKay: It is an honour to follow my hon. Friend the Member for Bolsover (Mr. Skinner), because he puts his finger on the truth every time that he makes a point.
I am sorry that the hon. Member for Bedfordshire, North (Mr. Skeet) is not in his place. He said that the coal industry tried to isolate itself from the economy. It has never done that because it has always been the economy. Those hon. Members who want the coal industry to return to market forces were not saying that during the Robens era, when he patted miners on the head and said, "Go back to work for sixpence." At that time the coal industry could have sold its coal for almost any price, but it did not do so. It had consideration for other industries and the


economy of Britain. If it had not done that, it would now have money from the sale of that coal for investment. But the industry, which has always been loyal to Britain, decided that the economy and the country came first.
My hon. Friend the Member for Bolsover referred to pit closures. The industry has always had a closure plan, which has worked well. Trouble begins only when there is interference with that plan. The Prime Minister had to back-pedal on the list of colliery closures—she did so within two days because she realised the trouble that would be caused.
The coal industry is a magnificent conglomerate of miners and mining engineers. The Government are trying to take what they call the worst parts of the industry and cut them off. In fact, the worst parts could be the best parts in perhaps 12 months' time, and the good parts could be the worst parts at that time. How far does one keep cutting? It is all very well to say that as soon as a pit becomes uneconomic it should be closed, but that is what the Government have been doing all along with the industry in general: if it makes a profit, sell it; if it does not make a profit, close it. I was glad to hear the Minister say that he was not thinking of the privatisation of the coal industry in the foreseeable future, but I should like to know what he regards as the foreseeable future, because that has been said before.
The Prime Minister has said in answering parliamentary questions that the Government are looking only at ancillary parts of the industry. Again, what do they regard as ancillary parts? Does the Minister think that the central engineering workshops are an ancillary part? Is it that part that serves the mining industry as an engineering works that he has it in mind to privatise? If so, it would be ironic because the hydraulic shops have been set up by money from the NCB and the research and development on those hydraulic supports was paid for by the NCB. Private industry has been able to create a hydraulics industry—not only for mining but for other purposes — out of money from the NCB. Therefore, we have turned full circle; the NCB pays for the research and development and helps with the development of the establishment, and we finish up selling the workshops back to the firm that has been helped by money from the NCB to make more money out of the NCB, repairing the hydraulic supports that the NCB virtually gave it in the first place.
Closures are easy to discuss, but the social consequences, which some people seem to think do not exist, are very severe indeed. I have witnessed 10 collieries close in my constituency and seen the effects of those closures in human terms. Families have had to move out, and as the closure programme has gone on, people have had to move further away. Apart from the social consequences locally, one must bear in mind the effects on the children of mining families, who are moved in the middle of their education.
Two more collieries have recently closed in my area. Elsecar, where I spent most of my working life, finished this year after a successful run; one could not find a better pit in which to work. Rockingham colliery finished last year. Those two pits were closed due to exhaustion and there were no problems; the men who worked in them realised that those pits had come to the end of their useful life.
There are the other effects of closures, on local authorities and rates and on local shops. The street corner shops in my area have gone because there is no money to

sustain them. Then there are the industries that make the steel and supports, the mining conveyors and other machinery, for the industry, which is one of the CEGB's biggest customers. All of those depend on a viable mining industry.

Mrs. Currie: Is the hon. Gentleman aware that there are consequences that he thinks stem from colliery closures that do not have to happen at all? For example, my constituency, which once returned George Brown to Parliament with a majority of 16,000, substantially on the votes of miners, has since returned three Conservative Members and is an area in which most of the mines were closed by the Labour Government in the 1960s, in which the unemployment rate is half the national average and in which owner-occupation is 67 per cent. and rising.

Mr. McKay: The hon. Lady is talking about a district that has changed from an industrial to a dormitory area. I am simply saying that the only sensible time to close a pit is when there is nothing left in it. In closing pits, the Government are taking away not only existing jobs but jobs for future generations. That has happened during the time I have been involved in the coal industry, which goes back to 1945. The collieries have limped all that time. Collieries can alternatively be economic and uneconomic.
I know a colliery which I was sent to close — the people involved no longer work for the board, so it does not matter if I tell that story. There was no need to close the colliery. There was coal capacity at that colliery, and it is still operating successfully. The management at that time decided to take on employees and to find ways of keeping the pit open. Employees would have been dismissed because Hobart house wanted to close the colliery. We did not want it closed.
Many times, collieries have been closed on paper because it appeared that they would run out of coal. However, frequently they have remained in operation as successful collieries. Where do we draw the line when we say that a colliery is unsuccessful or uneconomic? Recently, the Minister visited the Barnsley area of the National Coal Board. If he had visited that area about 10 or 12 years ago, he would have found a very different place. Under the Government's policies there probably would not have been a Barnsley area of the Coal Board. It is now a successful area because of investment, the work that has been put in and the love for the area felt by those who live there. The pits in the Barnsley area could have been closed 12 years ago because the area was recognised as an old mining area with shallow coal seams.
There is no doubt that once again the industry has reached a critical point in its history. The recession has been caused by Government policies, factory closures, unemployment and cuts in energy demands that reached 12 per cent. during the past four years. All those factors have taken their toll. Cheap coal is sloshing about throughout Europe. That is what happens when some people say it is time that the coal industry looked at the market. It is not because the industry is not successful, but because the Government like nationalisation. That factor, as well as the Goverment's thinking when they appointed Mr. MacGregor as the Coal. Board chairman has fuelled the industry's fears.
My hon. Friend the Member for Bolsover mentioned the co-operation of the three main unions—the British Association of Colliery Managers, the National


Association of Colliery Overmen, Deputies and Shotfirers and the National Union of Mineworkers. That is not before time, because it is something that the Labour party put forward about four years ago. Why was Ian MacGregor appointed? There are more successful and better people within the coal industry who can manage its affairs. In fact, management in the coal industry came from the shop floor. The Government are trying to appoint someone who has not come from the shop floor and who does not have the feeling for the industry that the management has. Therefore, the Government are cutting straight across the middle management and BACM is worried about that matter. It is time that there was a tripartite meeting, and I should like the Minister to say a few words on what will happen. It is time also that "Plan for Coal" was recognised as being of strategic importance, as the industry seeks to over-ride short-term economic considerations. Can the boiler fuel scheme be extended to include local government offices, schools and such facilities? What has happened to the CHP schemes? In Yorkshire, there are some such schemes on the drawing board ready to be put into operation. I believe that there has been no mention of the problems that will result from the operation of the subsidence legislation. Where will the money come from? What will happen when the local authorities and the Coal Board get together to move the spoil heaps? I see nothing in the Bill to undertake those measures, and I should like the Minister to answer those questions.

Mr. Alec Woodall: Nothing that I heard on Second Reading, in Committee or today has caused me to change my mind one iota about the Bill. On second Reading I said that the Bill is nothing more or less than a Government vehicle to hasten colliery closures. That is the intention behind it. The evidence is provided in clauses 1 and 4. I have heard the speeches that have been made by Conservative Members on Second Reading, in Committee and today on Report, and they have not caused me to change my mind. Where is the stockbroker mafia that was present until about an hour and a half ago? Its members made their interventions and then left. During the debate they bared their breasts—

Mrs. Currie: The hon. Member is joking.

Mr. Woodall: I shall withdraw my last remark, Mr. Deputy Speaker, as the hon. Member for Derbyshire, South (Mrs. Currie) is present. If I do not, I might be accused of trying to turn the Chamber into a striptease joint.
Conservative Members declared the confidence of the Government in the coal mining industry, which, they claimed, was borne out by the Bill, but nothing could be further from the truth. The Bill will serve only to hasten the colliery closure programme. The Government will work hand in hand with MacGregor to bring that about.
The Government have talked about the massive increase in the amount of money that they are prepared to allow the coal board to borrow. The necessary provisions are set out in clause 1. My hon. Friend the Member for Midlothian (Mr. Eadie) has spelt out the burden of interest charges in day-to-day terms. Every miner will have to earn £35 every week to pay off the interest charges before he

is able to earn a halfpenny for himself. My hon. Friend's example spelt out the burden more clearly than anything else.
The Government are saying that the coal board can borrow money to preserve the future of the industry and to develop "new capacity". In 1946 it was vital that we nationalised the mines. We had to do so. There was token resistance from the then Tory Opposition. They knew that nationalisation was the only salvation for the industry and the country. During the debates that followed, it was argued from the Labour Benches that one of the reasons for the need to nationalise was the actions of the coal owners in raping the industry. They got out every piece of coal that was easy and cheap to get. They produced cheap coal and sold it seven or eight times.
I remember working for the old coal owners. When we asked for a wage increase, they would produce the books. They allowed us to study them, and they would say, "That is what it costs to produce a ton of coal. There are your wages. You can see that there is nothing left for us." They had seven or eight other sets of books in the town, and they sold the coal to themselves seven or eight times before it ended up with the consumer. That is how they made their profits.

Mr. Lofthouse: We were working for two bob a ton.

Mr. Woodall: Yes, and it was damned hard work. The managing director of the old colliery company for which I worked before nationalisation had started work at the company as the office boy at the age of 14. He put stamps on envelopes and ran errands, but he ended up as managing director. He died in 1946—he could not have died a minute sooner for me—and left a quarter of a million quid. That was by selling coal six or seven times over—coal that had been won by hard graft.
We are now being asked to return to the same method of winning cheap coal. The Government tell us that the answer is to develop "new capacity" to close down uneconomic capacity, and to hell with the social consequences.
The most obnoxious part of the Bill is clause 4. In addition to saddling the industry with massive interest charges, far greater than those which are currently being paid—my hon. Friend the Member for Midlothian has told us that for every pit £2 million was paid out in interest charges in 1982; and God only knows what we shall have to pay out in 1983, 1984 and 1985—the Government intend to increase by 400 per cent. the amount of money that they are prepared to make available to miners if they accept redundancy. They are just making the carrot bigger and more attractive, knowing that the men will take it. If we were in the pits now, and the same age, we would be grabbing. After a man has spent 40 or 45 years down the pit, he wants to get out. Much to our sorrow, and much to their sorrow — because they know that they are robbing their sons and grandsons of future jobs—the miners will take the carrot.
When a colliery is closed, it is gone for ever. In future generations there can only be new mines, which will cost a lot of money to sink. That happened in Yorkshire before 1979, with Kinsley drift, Royston drift and the Prince of Wales pit. Those were new drift mines sanctioned by the Labour Government under the "Plan for Coal". Not a single pit has been opened since then. "Plan for Coal" was framed by the Labour Government in 1974. Under that


plan the men had something tangible to work for. They had faith in the industry. What has happened to "Plan for Coal"? It has been torn up and thrown away. The Conservatives have a plan for less coal. All the emphasis in the report of the Monopolies and Mergers Commission is on new green field developments. The industry will be raped again, as it was by the former coal owners. New coal will be mined as cheaply as possible, and to hell with the communities.
The Government have not changed my mind. The Bill has been designed, hand in hand with the coal board, to speed up colliery closures. To hell with it. Let us throw it out and have something better in its place—something in which miners can have confidence.
My hon. Friend the Member for Bolsover (Mr. Skinner) mentioned solidarity. The miners are solid to a man on the overtime ban.

Mr. Lilley: Will the hon. Gentleman explain why the miners were not asked to vote on the subject?

Mr. Woodall: They voted on it. A special delegates conference was held. Every branch was told that a special delegates conference was to be held and that they were to be asked to support an overtime ban. The result was overwhelming. All the men said "Right." They are solid to a man.

Mr. John Powley: If the hon. Gentleman is so confident, will he tell us why every miner was not given an individual say in whether he wanted an overtime ban?

Mr. Woodall: The hon. Gentleman does not know the first thing about miners.

Mrs. Currie: Answer the question.

Mr. Woodall: What the hell does the hon. Lady know about miners? She is not even a good chairman of a housing committee.

Mr. O'Brien: Every miner in the United Kingdom had the opportunity not just to vote but to have a say about the approach on the wages offer, pit closures and the overtime ban. When the meetings were held, votes were taken. I attended a branch meeting. I speak from experience.

Mr. Woodall: My hon. Friend knows what he is talking about. What Conservative Members know about coal miners and coal mining could be put in a peanut.
From the point of view of energy needs, the Bill is not worth the paper that it is printed on. The Government are concerned only with closing pits and running the industry down.

Mr. Lofthouse: Does my hon. Friend agree that if the miners want a ballot they will demand it? They need no advice from Conservative Members.

Mr. Woodall: My hon. Friend is perfectly right, and hon. Gentlemen know that. I have sworn once tonight and I had better not do so again, but hon. Gentlemen are playing silly devils. They know that the Bill will do nothing for mining. It will increase the weight of interest charges round the industry's neck and close pits that should be kept open for miners' sons and grandsons.

Mr. Frank Haynes: I welcome the opportunity to participate in the debate. Although I do not

welcome the Bill, I will support it. It is plain that most right hon. and hon. Gentlemen do not have a clue about mining or the people involved in it. [Interruption.] I make a point and I receive only sneers. We have had filibustering from Conservative Members, which has prevented us from making speeches. They asked why everyone in the NUM did not have a vote. It is not allowed for in the rules. If the hon. Member for St. Albans (Mr. Lilley) understood the rules of the NUM, he would not have asked his questions. The NUM rules are specific about paper ballots. The NUM is respected throughout the world, not just in Great Britain, for the way it is run. It holds a paper ballot on whether strike action is to be taken and it does not take such action unless the majority want it. I do not know what the hon. Member for Norwich, South (Mr. Powley) is laughing about. I am being serious.

Mr. Lilley: rose—

Mr. Haynes: I am not giving way. As my hon. Friend the Member for Normanton (Mr. O'Brien) said, miners are given the opportunity to vote. There has to be a special delegate conference, and following that, the message must be taken back to the branches, to tell them to hold meetings for everyone at the pit to attend and record their vote. It was stupid of the hon. Member for St. Albans to ask such a question.

Mr. Skinner: Does my hon. Friend agree that the miners who had the opportunity to attend those branch meetings, which were well attended according to all reports, could vote on the issue, unlike those Tory Members who discovered, when they read the papers one morning about four weeks ago, that there was a new chairman of the Tory party and that only the Prime Minister's vote had been cast?

Mr. Haynes: That is right. In Committee we have been discussing giving people the right to vote. How many people in the Conservative party had the right to vote on that issue? The hon. Member for Norwich, South does not like that. It hurts. It is undemocratic, and yet we are being told to be democratic. This is the only party in the House that understands democracy. My thoughts and recent contributions in the Chamber about mining have been confirmed. The Bill is not aimed solely at pit closures. The Government are aiming at the privatisation of the coal mining industry. Ministers deny that but the Government want uneconomic pits closed, as the private sector will only buy those which are making massive profits. Many are doing that.
My hon. Friend the Member for Bolsover (Mr. Skinner) might not be aware that I worked at a pit in his constituency for four months before nationalisation. I remember the suffering under the old mine owners. I welcomed nationalisation as the saviour of the industry and the people who worked in it. The hon. Member for Norwich, South is learning about the mining industry. He has not been out of nappies long. We got rid of our suffering because of a first-class Labour Government in 1945. Nationalisation was the only course open, because the mine owners had raped the industry and taken all of the cream. They left all the dirty stuff for the people who worked in the industry. The people worked like nobody's business to put the industry right, in the interests of the economy and not merely for themselves. They have played their part ever since.
Some pits in my constituency are breaking output records and have nearly 60 million tonnes on the surface. It is lying idle and the Government do not know what to do with it. Many of my hon. Friends have suggested what could be done with it. Even Tory Members get telephone calls from old people who cannot afford to keep warm. The Government could make a real effort to put that right. I have a better suggestion. We should close Hobart house. We would be better off as a result. Hon. Members should consider the savings. We could then ship MacGregor back to where he belongs and let the industry get on with its job. Hobart house is a burden on the industry and always has been. It makes no contribution to coal production. It is merely a burden on the industry's resources. The administrations in the areas where the work is done run the industry. If the Government want closures they should close Hobart house. That would be progress.
I remember when Lord Robens, as chairman of the NCB, tried to introduce a new automatic system of coal production. It was called Rolf. It would not work, but the men back at the pit were prepared to try it and wanted it to succeed. We have always been like that. I have spent about 30 years in the mining industry. Machines were thrown our way, so that they could be tried out and perfected with a view to increasing productivity. At the same time we were making a contribution to the nation and a little more money was put in the lads' pockets. They had to work hard. Nine times out of 10, they succeeded.
I remember the Rolf system coming into the Nottinghamshire area. It meant that nobody was on the coal face. Someone was at the gate to work the system on a switchboard. However, the machine kept digging into the floor. In the end it had to be withdrawn because it would not work, but the lads gave it a real try with a view to achieving progress in the mining industry.
I resent some of the comments by Tory Members during the debate. They seem to think, particularly the hon. Member for Bedfordshire, North (Mr. Skeet), that the lads do not try and that it is the lads' fault, and nobody else's. That is not so. The hon. Gentleman talked about water at Selby. There is plenty of water at Bedford, in the whacking great holes that need to be filled. They were caused by the London Brick company. They are unsightly, and can be seen from the train.
Some of my hon. Friends talked about pit tips, and the need for money to be spent on them. My local county council has played its part. I am sure that the hon. Member for Nottingham, South (Mr. Brandon-Bravo) will agree with me that the county council in Nottinghamshire, under both Tory and Labour administrations, has played its part in beautifying the pit tips. If the money is spent properly, they can be beautified. We could have a ski lift on top of them and people could go to them for a picnic on a Sunday afternoon in the nice weather. [Interruption.] Tory Members may laugh. I am being serious. That is what is happening. Tory Members do not know what is happening. They do not understand.

Mr. Powley: Rubbish.

Mr. Haynes: What is the big joke? I am trying to be serious. It is a serious debate. The Bill and pit closures are serious matters. This is not a joke. This Bill means jobs in the mining industry.
In my constituency there used to be a pit called Kirkby, known as "summit" many years ago. It was promised a long life. Some £2 million was spent on a new washery plant, and six months later, the pit was closed, although it had many years of reserves. That is the sort of policy that the board has. The policy that the Government want the NCB to have is to close down the pits as fast as possible in the interests of privatisation. I am convinced that it is Government policy to sell off profitable pits and close unprofitable ones.
Some Opposition Members, and those in the mining industry, will fight that, as they are fighting now for a square deal. Conservative Members do not understand that the overtime ban has nothing to do with the wages offer. If the wages claim could be met, and the men could agree to the board's offer, the overtime ban would continue, because it is related to pit closures. Conservative Members assume that the ban relates to the 5·2 per cent. offered by the board. The national executive committee of the NUM wishes to return to the board to continue to negotiate an increase in the offer.
When the pit at Kirkby was closed, Nottinghamshire county council, which was Labour-controlled at the time but which the Conservatives later took over, introduced a system to encourage industries to take over the land on which the pit stood. The Conservative council said that it would meet private industry pound for pound. That is a good policy, but it cannot be continued, because the Government are clobbering the local authorities so hard that they cannot afford to do it. Those who are made redundant will have to join the dole queue, which will cost the state even more money.
This is a serious debate about British coal mining, and it relates also to jobs, to the economy and to people going on the dole because of the Government's policies. Yet Conservative Members have treated it like a joke, with much sniggering and sarcastic remarks. It is disgusting, and it shows clearly what Conservative Members think of the industry. The Opposition have made it clear that they will continue to fight. I support the miners in their present struggle, and will join them on the picket line, if necessary. They should have a square deal, but the Government are not giving them one. They are not giving the nation a square deal, because if they start to close as many pits as they wish, we shall soon have to import coal, as we did years ago, because we cannot produce it ourselves. I am prepared to toe the line and to fight that policy until the Government change their minds, or until the people throw them out so that we can have a decent policy for coal mining.

Mr. John Home Robertson: I am grateful for the opportunity to speak briefly at the end of this debate on the coal industry. I have listened to most of the speeches from both sides of the Chamber, and I support what was said by my hon. Friends. They are right to be concerned about what is happening to coal mining.
Many of my constituents are miners, but there are no working pits now in East Lothian. The miners in my constituency are some of the industrial gipsies described by my hon. Friend the Member for Bolsover (Mr. Skinner). When the pits in East Lothian were closed, perhaps for good reasons, they had to move to other areas, especially to the constituency of my hon. Friend the Member for Midlothian (Mr. Eadie). Some of my


constituents now work at Monktonhall, which has been in the news a great deal in past weeks and months. Hon. Members will recall the dispute into which miners at that colliery were forced by the National Coal Board. At the beginning, 300 redundancies were declared without any consultation with the trade union concerned. The following day, when there was a pit head meeting to discuss those redundancies, the men were a few minutes late going down the pit and they were confronted by a lock-out. Earlier, development work at that colliery had been stopped—again without any consultation.
Not surprisingly, the men at Monktonhall decided to fight for their jobs and the future of their colliery. Sadly, in the strike in which they were involved, they were completely isolated, but they won the argument and have now gone back to work. They are completely united with other miners throughout the United Kingdom in the overtime ban that is now in effect. The miners united are a force that it is impossible for any Government to resist, and long may that continue.
The men at Monktonhall find that they are now on a hit list of threatened colliery closures—the hit list exists—because of the Government's failure to ensure that coal is put to good use. The Government have failed sensibly to manage the market for coal and other sources of energy. It can be argued that they are happy to sacrifice the future of an essential industry that we shall need in the future.
The situation in Scotland is relevant, because it could be faced by other areas in the United Kingdom. It shows how the Government have failed to cope with the opportunity that Scotland has presented. Last year, or the year before, the Government had a windfall of cheap energy. The power station at Peterhead had been constructed to burn oil, but also available, at least in the short term, were some extremely cheap gas concentrates from the North sea oilfields, which could be burned while the Mossmorran petrochemical plant was commissioned.
At about the same time, the Invergordon aluminium smelter faced a crisis. One might have thought that a responsible Government would have taken advantage of the cheap electricity from Peterhead, taken account of the need for cheap electricity at Invergordon and kept the aluminium industry going in Easter Ross. That would have been, and still could be, of enormous benefit to the people of Scotland, particularly to those employed at Invergordon. It would also have made constructive use of the cheap power from Peterhead.
However, it is too much to expect this Government to be constructive or sensible. They were content to allow the Invergordon smelter to close, although two years later there is a need for even greater aluminium capacity in the United Kingdom.
That buckshee power from Peterhead is cheaper than electricity generated from other sources in Scotland, at least in the short term, and is crowding out the electricity that could be provided by Cockenzie power station in my constituency. That is directly related to the crisis at Monktonhall colliery. Since Cockenzie has been crowded out by the short-term availability of cheap electricity from Peterhead, the coal from Monktonhall has not been burnt there. Therefore, there is a massive stockpile of coal at the pithead and at Cockenzie power station. That has exacerbated the existing overcapacity in electricity generation in Scotland. In addition, it is an absurd way of

managing Scotland's energy industry, and contributes to the decline in Scotland as well as to the general level of unemployment.
Instead of an aluminium smelter working and contributing to the economy and instead of taking advantage of the cheap energy available from Peterhead, we have even more unemployment than we might otherwise have had. A modern pit at Monktonhall is at risk. A modern power station at Cockenzie is at risk unnecessarily because of the Government's failure to manage sensibly the industry and Scotland's energy supplies.
Obviously, I welcome the additional money being made available to the coal industry under the Bill. However, it is no substitute for the sensible management of energy and industrial policy in Scotland. The Government's failure is shown by the chaos suffered by those of my constituents who are involved in electricity generation or coal mining. The Government's failure is also highlighted by the employment and industrial crisis that has resulted in Easter Ross from the closure of the aluminium smelter. I suppose that the additional money provided in the Bill is a useful stopgap but it is no substitute for a sensible energy and a proper industrial policy.

The Under-Secretary of State for Energy (Mr. Giles Shaw): It seems a considerable time since the hon. Member for Merthyr and Rhymney (Mr. Rowlands) opened the debate. The hon. Member for East Lothian (Mr. Home Robertson), a Scot, was the last Opposition Back-Bench Member to speak. However, the hon. Member for Merthyr and Rhymney was right to remind us that the Bill must be seen in the context of the position that the industry now finds itself in. There is nothing new about the Bill. As all hon. Members know, this Bill is another in a series of Measures offering substantial amounts of additional financial support to the industry, and uprating the redundancy payments scheme which has been operating for some years.
The hon. Member for Merthyr and Rhymney made several points, which I shall endeavour to answer. In particular, he asked about Herrington colliery. He said that he believed that the policy has been changed. The hon. Members for Midlothian (Mr. Eadie) and for Bolsover (Mr. Skinner) also raised that point. The closure of any colliery is a matter for the board and not for the Government. The hon. Member for Merthyr and Rhymney will know the procedure for closures. I understand that the proposal has been made locally but that there has not been any discussion of it or any confirmation. Therefore, it may be in the early stages of consideration.
However, it is certainly the NCB's policy to avoid compulsory redundancies wherever possible, by giving redundancies to older men who are prepared to leave, and by transferring younger men to other pits. That policy has been successful in the past. I am sure that the board will seek to apply the same arrangements at Herrington if there is a proposal for closure that goes through the usual process. I know of no reason to think that the policy at Herrington would be different if there were a discussion about closure.
I was also asked about privatisation and National Smokeless Fuels. As I said in Committee, the board will discuss the question of ancillaries. I can confirm that there


is a target for the realisation of assets of some £10 million in the forthcoming year, and that it will be at least that figure in the years ahead. However, I assure the House that such major changes will have to be fully considered in consultation with the Department. I shall certainly do my best to keep the hon. Member for Merthyr and Rhymney properly informed of any developments. Therefore, where possible, there will be discussion about them.
My hon. Friend the Member for Darlington (Mr. Fallon) asked about the Monopolies and Mergers Commission report. An interim report was made by the NCB soon after the MMC published its finding. It published its report in June and the interim report was made in July. On 28 July, the Secretary of State published the Government's interim view of the MMC report.
The hon. Member for Midlothian referred to some important issues, as he usually does in debates on the coal industry. The hon. Gentleman and the hon. Member for Orkney and Shetland (Mr. Wallace) referred to the South of Scotland Electricity Board and the National Coal Board. I understand that the NCB is negotiating with the South of Scotland Electricity Board an arrangement which will be parallel to that between the CEGB and the NCB. The object is to provide competitively priced coal, taking into account the RPI, inflation and world coal prices. That will involve just under 5 million tonnes for several years. That should provide some reassurance. After the elimination of gas firing at Peterhead, the plan is still for a return to coal. The details of the negotiations are not yet available, but significant amounts are involved.
I am sure that we have never had a debate on coal when the hon. Member for Midlothian has not referred to the Point of Ayr liquefaction project. The scheme for the 2½ tonnes a day coal liquefaction plant is proceeding according to the schedule agreed earlier this year; no change has been made to that schedule. The Department and the NCB are sharing equally the cost of up to £1 million for the basic engineering design stage which should be completed in mid-1984, when a decision will be taken on construction. The NCB has strengthened its project management capability. We are confident that a formal offer of support for the project will be made by the EC commission. The NCB is also continuing discussions with the private sector and making progress in securing participation in the project. The news is good on that front.
The right hon. Member for Barnsley, Central (Mr. Mason) made an important interjection when he referred to the Grimethorpe project and asked whether it was still on course. The Department is supporting the NCB's participation in that large experimental fluidised bed combustion facility. The £60 million project is funded equally by a number of countries. My Department at present provides the whole of the United Kingdom contribution. That will remain so through the coming year.
My hon. Friend the Member for Bedfordshire, North (Mr. Skeet), as usual, made an important contribution when he reminded us that the taxpayer must have a fair deal too. My hon. Friend's patience in dealing with such matters rightly reflects our great concern that, after all the expenditure in the industry, changes should be made to give the taxpayers some return on their investment.
The hon. Member for Don Valley (Mr. Redmond) asked about the interconnector with France. I assure him that it has a limited application and is largely for the

managerial transfer of load rather than a major incursion into the United Kingdom grid system, and to deal with excess spinning capacity. I know of no official estimate that imports could be as high as 7 million tonnes, the figure which the hon. Gentleman used in Committee. The figure will be significantly lower than that and much nearer the 4 million tonnes of which he is aware. Will the hon. Gentleman please bear in mind that since 1969 we have changed to being net exporters of coal. That must be welcomed by hon. Members of both sides of the House.
My hon. Friend the Member for Bromsgrove (Mr. Miller) raised an important issue in relation to the foundry coke industry. He drew to the attention of the House the consequences of the elimination of the coking subsidy which is contained in clause 2 of the Bill. My hon. Friend mentioned the price increase on foundry coke that might be implemented when the present subsidy ends. I can well understand that this is a matter of great importance to the foundry coke industry. It is causing concern to a number of people who have made representations to me and to the Department. I believe that the foundry coke producers will be sensitive to the position of their customers. After all, they have every interest in ensuring that their customers stay in business.
I am in touch with the chairman of the National Coal Board on this matter and I have drawn to his attention the points raised with me by the foundry industry. I appreciate its concern. At the moment the industry has assumed that prices will rise by as much as £22 per tonne, but I do not yet know whether this will indeed be the case. However, I assure my hon. Friend that this is one of the points I have taken up with the chairman of the board and I will write to my hon. Friend in due course when I have further information. I hope that my hon. Friend will be assured that I am considering his points carefully.
The hon. Member for Wentworth (Mr. Hardy) mentioned acid rain. I take a great interest in the matter because of my previous experience at the Department of the Environment. The £4 million research project that the National Coal Board and the CEGB have placed with the Royal Society is a major contribution to our understanding of this problem. The hon. Gentleman must also know that scientific opinion has been changing on this matter. The Swedish Academy of Science has recently taken different views on the cause of the problem in Scandinavia and different views have been expressed about the cause of the damage to forests in West Germany. Before major steps are taken involving large amounts of money—although the hon. Gentleman suggests that they may not be as large as was at first feared—which affect the potential cost of electricity, it is essential to try to obtain more scientific information on this matter; that we intend to do.

Mr. Hardy: I am obliged to the Minister for that reference and for the fact that he has stayed for such a large part, if not the whole, of the debate. That is appreciated. I take note of what he said. However, would it not be premature for those who are not interested in the coal industry to be allowed to get away with sweeping condemnation of the coal industry for pollution in other countries? Will he also make the point that we may have one of the major answers to the problem?

Mr. Shaw: I accept that. When I was at the Stockholm conference in 1982 I made that point in public.
My hon. Friend the Member for Tatton (Mr. Hamilton) made the point that the Bill is a two-year measure. My


hon. Friend rightly said that some improvements must be shown by the end of that period. I give him that assurance. The object of the Bill is not only to continue a rate of payment and a massive rate of borrowing but to provide a time scale within which the industry, and the Government's view about the industry, must be assessed in the light of current events. My hon. Friends will recognise that the two years through which the industry is now to pass will be of crucial importance in determining its size and scale for the future.
The hon. Member for Rother Valley (Mr. Barron) referred to investment. He knows from his service in Committee just how important this issue has been. At current prices, since 1974, £7,150 million has been invested in the industry. That is significantly more than the £6·5 billion envisaged in the 1977 updating of the 1974 "Plan for Coal". Since 1979 investment has averaged £2 million a day and will proceed at more than that rate not only this year but next year despite the fact that the National Coal Board is currently losing £1·5 million a day.
The hon. Member for Bolsover asked about subsidies and about the European price of coal. I must remind the House with some firmness that, if we are to invest this sum in the industry, it cannot be ignored when we are looking at the subsidised prices of foreign competition. There are unit subsidies per tonne in Europe — £17·2 in France, £17·7 in Belgium and £4·5 in the Federal Republic of Germany. But the amounts spent on investment in coal production in Europe in 1982 were £37 million in France, £26 million in Belgium, £259 million in the Federal Republic of Germany and £685 million in the United Kingdom. Opposition Members must take into account those massive figures when comparing the competitive position of coal industries in different countries.

Mr. Skinner: The Minister talks about finances, which are the crux of the problem for the Government. He referred to interest charges and the fact that the industry loses £1·5 million per day. He should examine the different sets of figures — £366 million in interest charges in 1982 and £1·5 million lost each day. There are 365 days in a year. It does not take another Pythagoras to realise that two thirds of the total loss is the result of the interest charges.

Mr. Shaw: The hon. Gentleman must get it into his head that every year the NCB receives deficit grants that more than offset interest charges. He fails to recognise — [Interruption.] The hon. Gentleman is, as usual, screaming for a capital write-off. The NCB receives that every year. The taxpayer has provided total deficit financing. In 1978 the interest charge was £138 million,

in 1979 it was £184 million, and each year the deficits have been written into the NCB's figures so that it is in no way adversely affected by the high interest charges that it carries.
There is not another industry in Britain that has anything like that assistance in the financing of its operations. In the absolute amounts being spent on the coal industry, both in deficit financing and social grants, the NCB is uniquely placed because the taxpayer has so far patiently continued to provide it with a high level of support.
The Bill is an essential part of the servicing of the NCB during the next two years. It seeks to continue an extremely high level of borrowing, and it also continues the redundant mineworkers payments scheme. It seeks to end some schemes for which advance provision has been made and which will now be subsumed into the deficit financing of the industry.
We have today debated the past of the industry in large measure. Very little account has been taken of its future, yet it is with that future that the House must be critically concerned. We must have a coal industry that cart provide an effective contribution to a national energy policy. It must be able to justify the large sums of money being invested in it. It must demonstrate that it can produce coal at a price that is both profitable to the industry and competitive in world markets. If passing the Bill tonight provides those objectives, I am sure—

Mr. Rowlands: I am sorry to stop the Minister in full flow, but I wish to add my thanks to those of other hon. Members to the hon. Gentleman for staying in the Chamber throughout the whole of the debate and listening to every speech. He is referring to the future, part of which has been mentioned by my hon. Friends and myself—that being the boiler conversion scheme. When will the House have a statement about all the projects in the pipeline, which are part of our future market for coal?

Mr. Shaw: I trust that we are on the last lap of the consideration of that scheme. I recognise that 31 December is the cut-off date, and I hope to make a statement before then.
In commending the Bill to the House, I conclude by saying that although it is a small measure it a vast measure of national resources. It is for the industry to demonstrate within the next two years that it can put the industry right, which will allow the Government to renew their confidence in the coal industry.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Town and Country Planning Bill

Considered in Committee.

[Mr. PAUL DEAN in the Chair]

Clauses 1 to 3 ordered to stand part of the Bill.

Clause 4

REQUIREMENT OF PLANNING PERMISSION FOR CONTINUANCE OF USE INSTITUTED BY THE CROWN

Dr. David Clark: I beg to move amendment No. 4, in page 5, line 15, leave out subsections (1) and (2) and insert—
'(1) A local planning authority or, in Scotland, a planning authority in whose area Crown Land is situated may direct that subsection (2) below shall apply to such use or such building or works as is or are specified in such direction, being a use resulting from a material change made or proposed to be made by the Crown in the use of the land or being a building or works constructed or proposed to be constructed by, on behalf of or for use by the Crown.
(2) Where a direction is made under subsection (1) above in respect of any land, then if at any time—

(a) in the case of the use the land ceases to be used by the Crown for the purpose specified in a direction; or
(b) in the case of a building or works any person acquires a private interest in the land
the resumption of that use as a private use or the retention of that building or those works by a person having a private interest, as the case may be, shall, for the purposes of the Act of 1971 or, in Scotland the Act 1972, be taken to involve development of the land.'.

The Chairman: I suggest that it would be for the convenience of the Committee to discuss at the same time the following amendments:

No. 5, in page 5, line 29, leave out 'agreement' and insert 'direction'.

No. 6, in page 5, line 32, leave out 'agreement' and insert 'direction'.

No. 7, in page 5, line 34, leave out 'agreement' and insert 'direction'.

No. 8 in page 5, line 35, leave out 'agreement' and insert 'direction'.

No. 9, in page 5, line 40, leave out 'agreement' and insert 'direction'.

No. 10, in page 5, line 41, leave out 'agreement' and insert 'direction'.

No. 11, in page 5, line 46, at end add:—
'(6) A copy of any direction may under subsection (1) above shall as soon as may be after it has been made be served upon the appropriate authority and upon any other person who appears to the local planning authority or, in Scotland, the planning authority, to have a private interest which is materially affected by the direction.'.

Dr. Clark: These are probing amendments. The clause in essence deals with the situation where, following an agreement between the Crown and a local authority, planning permission is required for a change of use when an establishment passes from the Crown to another body. In our view, that agreement should not be permissive but mandatory and therefore should be a direction, and several of the amendments in the group are drafting amendments to implement that.
We feel that to restrict planning permission, even by agreement, to change of use is too restrictive and narrow. Will the Government, either here or in another place, consider extending that provision to any building? The Crown may establish, say, an engineering works— it

might be associated with the armaments industry—and sell that establishment to a third party. I understand that, under the clause as drafted, planning permission would not be required so long as the factory was used for engineering purposes. We say that in the name of good planning, it would be helpful to local authorities if they were required to give planning permission in respect of all buildings, and not only for a change of use.
Amendment No. 11 would cause there to be more publicity so that people would know what had been achieved following a direction or agreement. This group of amendments is designed to make the Bill more meaningful and provide for better planning at the local level.

The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I am anxious to help the hon. Member for South Shields (Dr. Clark) because he has given much thought to this point. Indeed, we touched on it on Second Reading. I know that he understands that I am anxious to ensure that the Bill is right in every sense before it goes to another place. The hon. Gentleman raised certain points, on which we may be able to help somewhere along the line.
The difficulty with the amendment is that it calls into question, even though in only one respect, the principle that development by the Crown is not subject to planning control. As I explained to the hon. Gentleman on Second Reading, it is our clear and firm intention that the Bill should not undermine the Crown's position in that way. At present, the Crown can make a material change in the use of the premises it occupies—in other words, from a hotel to offices—without the need to obtain planning permission. The amendment would enable a local planning authority to require the use to be discontinued when the Crown ceases to occupy those premises.
If planning permission for a change of use of non-Crown premises were always made personal to the particular occupier, there might be a case for letting the amendment through. However, that is not the case. Planning is about the use of land, not about the person who happens to be the occupier of the land at a particular time. Normally, once a change of use has been permitted, it can continue indefinitely, regardless of who occupies the premises. It is only in exceptional circumstances that either we or the local planning authority would regard it as appropriate to impose a condition that a use should cease when the occupant changes. We are, therefore, talking not about a routine condition, but about a substantial power for local authorities with significant implications. Moreover, as the amendment is drafted, the Crown would not just be in the same position as a private person in those circumstances but in a worse position, since no right of appeal has been provided against the local planning authority's direction.
There is a well-tried procedure by which Government Departments consult local planning authorities about their proposals for development, including material changes in the use of premises. This procedure is set out in Department of the Environment circular 7/77 and its Scottish and Welsh equivalents. The procedure is similar to that for a planning application except that, when there is an objection by the local planning authority, instead of the authority refusing the application the matter is automatically referred to my right hon. Friend the Secretary of State for the Environment or for Scotland or


Wales as the case may be. He considers representations from all concerned and may order a non-statutory inquiry to be held. This procedure gives ample opportunity for a planning authority to argue that, if the Crown is to make a material change in the use of premises which it occupies, that change should be personal to the Crown and discontinued when some other person takes over the premises. Clause 4 provides a procedure by which this can be done by agreement, and I am confident that Crown authorities will be willing to enter into such agreements when the case for doing so is made out.
Amendment 4 would also enable a planning authority to direct that planning permission, and that would be required for the retention of a building erected by the Crown after the Crown ceased to be the occupier. In effect, such a building might have to be pulled down, even though it was intended as a permanent building. We can see no justification for giving the local planning authorities such a power. It is most unusual for permission for the erection of a building to be temporary. I must resist amendments Nos. 5 to 10 on the same grounds.
I have some sympathy with the thinking behind amendment No. 11. As the hon. Member for South Shields has explained, it will ensure that a third party with an interest in land occupied by the Crown—for exmaple, a freeholder—is made aware of an agreement made under clause 4 to prevent a material change of use begun by the Crown from being continued by another occupier without the grant of planning permission.
The drafting of the amendment needs to be tidied up, but I am certainly willing to accept the theme of what the hon. Member for South Shields said. Will he, therefore, agree to withdraw the earlier amendments? It would be my wish to proceed with the matter in another place, and to ensure that we get the drafting right.

Mr. Simon Hughes: Would the extent of the material change govern, for example, a change between land owned by the Crown and used for farming and land owned by the Crown and used for defence purposes? I think that the public would be concerned that a local authority should have an entitlement to adjudicate upon such a substantial change. It is possible that it would not be easy to arrive at an agreement on such a change. I think that considerations of that nature prompted the amendment that has been moved by the hon. Member for South Shields (Dr. Clark). A change of the kind that I have postulated would challenge the entitlement of the Crown to escape normal planning procedures, which has been a presumption of planning since 1947. The general feeling on Second Reading seemed to be that that presumption was due for reconsideration. Does the Minister accept that there is proper concern that there may not be agreement in the more controversial areas, such as the one that I have outlined? There are others that might be less dramatic but extensive in terms of land area and change of use.

Mr. Macfarlane: These are matters that must be considered by means of case-by-case analysis. I cannot give a definition to the hon. Gentleman here and now. Every case is examined and there is a set of procedures that we have to follow. Clause 4 provides a procedure by which this can be done by agreement. I am confident that the Crown authorities will be willing to enter into such

agreements. It is the spirit that lies behind the amendment that leads me to accept some of the suggestions of the hon. Member for South Shields while rejecting others.

Mr. Hughes: Is the Minister saying that the Crown would be willing to accept the view of the local authority if, in a particular instance, the local authority was resistant to a change of such a material nature as that which I have outlined? An agreement would require the consent of both sides. The Minister may be able to envisage a hypothetical case of the kind that I proposed, where there might be substantial resistance by a planning authority to a material change — for example, a change from agricultural to defence use. Such a change would not necessarily lead to a local authority's agreement.

Mr. Macfarlane: I do not know whether the hon. Gentleman was present when I said earlier that there is a well-tried procedure by which all Government Departments consult local planning authorities on their proposals for development, including material changes of premises. That procedure, as I said earlier, was set out in the Department of the Environment's circular 7/77 and the Scottish and Welsh equivalents. I have said that clearly, and it is in Hansard. I wonder whether the hon. Gentleman was present when I said it.

Dr. David Clark: The Minister having given an assurance that he will consider the wording of amendment No. 11, that he agrees with the sentiments that it expresses and that he will ascertain whether it is possible to introduce an amendment in another place, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clauses 5 and 6 ordered to stand part of the Bill.

New Clause 1

EXTENSION OF TOWN AND COUNTRY PLANNING (SCOTLAND) ACT 1972

`(1) In section 275 of the Town and Country Planning (Scotland) Act 1972, at the end of the definition of "land" the following words shall be inserted:—
For the purposes of this Act 'land' also includes Crown land on the foreshore and the seabed which lies within the areas designated under section 1(7) of the Continental Shelf Act 1964 which are adjacent to the coast of Scotland.

(2) For the purposes of this section the Secretary of State for Scotland shall designate the areas of the seabed which shall be brought under the authority of each coastal local planning authority by regulations, a draft of which shall be subject to approval by resolution of both Houses of Parliament: in determining boundaries for the purposes of this subsection the Secretary of State shall have regard to such factors as seem to him to be relevant, but in general he shall extend the boundary on shore of a local authority in a straight line to the point at which it reaches the boundary of the area designated under section 1(7) of the Continental Shelf Act 1964. In the case of an Islands Council he shall establish a median line between its area and that of any neighbouring authority.'.—[Mr. Home Robertson.]

Brought up, and read the First time.

Mr. John Home Robertson: I beg to move, That the clause be read a Second time.
I confess, Mr. Dean, that it came as a pleasant surprise to me to discover that the clause was in order and had been selected for debate. I am pleased that that is the position. I make no apology for detaining the House at this stage. If the House can rush through legislation to correct one of


the anomalies concerning the status of the Crown Estate Commissioners, it will do no harm to consider another absurdity confronting a number of my constituents and others round the coast of Scotland.
The clause is intended to extend planning controls to cover development on the sea bed off the Scottish coast. It makes provision for the definition of boundaries of areas of sea bed which come under the control of each separate planning authority. The House may wonder what the connection is between the Scottish sea bed and the Crown Estate Commissioners. I was surprised to learn that the Crown Estate Commissioners own the whole sea bed, including part of what I had assumed were international waters in the North sea. The point was established by the House of Lords after a case between the Lord Advocate and the Clyde trustees in 1891.
The Crown Estate Act 1961 confirmed that curious state of affairs. The Act conferred wide-ranging powers on the commissioners. Section 1(2) of the Act provides:
Subject to the provisions of this Act…the Commissioners shall…have authority to do on behalf of the Crown over or in relation to land or other property, rights or interests forming part of the Crown Estate…all such acts as belong to the Crown's rights of ownership, free from any restraint on alienation imposed on the Crown by section five of the Crown Lands Act, 1902, or by any other enactment (whether general or particular), and to execute and to do in the name of Her Majesty all instruments and things proper for the effective exercise of their powers.
That is wide-ranging stuff, but section 1(5) of the Act is so memorable that everyone should hear it. It is an all-purpose let-out. It reads:
The validity of transactions entered into by the Commissioners shall not be called in question on any suggestion of their not having acted in accordance with the provisions of this Act regulating the exercise of their powers, or of their having otherwise acted in excess of their authority, nor shall any person dealing with the Commisioners be concerned to inquire as to the extent of their authority or the observance of any restrictions on the exercise of their powers.
They can do exactly what they like, apparently, restricted only be section 3 of the Act, which restricts to 100 years the length of leases that they can grant.
That may sound like yet another quaint little constitutional anachronism, but it means that an obscure and unaccountable body has absolute control over activities on 136,000 nautical square miles off the coast of Scotland and a further 60,000 nautical square miles off the coasts of England and Wales. I understand from the Foreign and Commonwealth Office that the area off the coast of Scotland starts from a point 183 miles off the coast of Berwick and extends to points 352 miles north of Dunnet head on the mainland of Scotland and 434 miles west of Ardnamurchan point on the west coast —presumably because that includes Rockall. The Minister has been well briefed, because I have had a chat with him about this matter.
That is a fair scalp of territory, amounting to 202 nautical square miles. How interested are the commissioners in that massive area? Their principal concern is their ownership of properties such as Oxford street, most of Victoria, Whitehall, Regent's park and land at Ascot and Windsor great park — not to mention colossal agricultural and forestry estates all over the country. Who are the commissioners?

Dr. David Clark: Does my hon. Friend assume that the Scottish boundary with the east coast of Britain goes diagonally north eastwards or directly eastwards? That is an important point.

Mr. Home Robertson: It ought to be south eastwards, in order to include the whole oilfield, so that, when we achieve independence—when we achieve autonomy, I should say—we shall have the maximum control over the oil revenues. However, my hon. Friend should not have led me down that byway.
In recent years there has been confusion in respect of licences to develop marinas and fish farming, especially on the West coast of Scotland. There was a famous incident when the Scottish Development Agency, the Highlands and Islands Development Board and local authorities developed a marina at Ballachulish near the old slate quarry. They arranged for a company to operate the marina, only to discover that the Crown Estate Commissioners had granted a licence to someone else, without asking or informing anyone. There have been similar shambles in respect of fish farming. Fish farming rights have been leased to outsiders without consulting the people who might have been using the waters involved for generations. I understand that has been a problem in some west coast sea lochs and the Western Isles.
My interest In the problem started in October 1982, when the Firth of Forth Fishermen's Association told me that it had been informed that the Crown Estate Commissioners had granted a licence to a firm in Greenhithe, Kent, to prospect for sand and gravel on the sea bed off most of the east coast of Scotland. The association had obtained the informations in accordance with a well-intentioned but inadequate code of practice for liaison between the commissioners and fishing and dredging interests, Old Uncle Tom Cobbleigh and all.
My complaint is that there was little consultation, no disclosure of the amount paid, no competition for licences to carry out prospecting work, and no advertisement of the fact that it would be carried out. Civil and Marine Ltd. of Greenhithe, Kent, obtained the licence to prospect for aggregates in most of the area west of a line from Aberdeen to St. Abbs in Berwickshire. That includes virtually the whole of the firth of Forth and the firth of Tay, plus three detached areas further east.
That was more or less a fait accompli for the fishermen of the area. According to the voluntary code of practice, fishing interests were informed that a dredger would be taking samples from the area, which includes valuable fishing and fish breeding grounds as well as grounds used for the catching of prawns, crabs and lobsters. The fishermen objected to what was going on and they lodged their complaint with the Department of Agriculture and Fisheries for Scotland, with me as their Member of Parliament and with the Crown Estate Commissioners.
I took the matter up with the commissioners and the Minister of State, Scottish Office, who was then Lord Mansfield. I understand that a meeting took place between the company and the fishermen under the auspices of the Department of Agriculture and Fisheries. A letter from the secretary of the Eyemouth and District Fishermen's Association about that meeting said:
Company spokesmen"—
that is Civil and Marine Ltd—
met with DAFS officials and representatives from the Scottish Fishermen's Federation, the Firth of Forth Fishermen's Association and the Fife Fishermen's Association in Chesser


House on 10 December. It was pointed out by the fishing representatives at that meeting that the areas envisaged for sand/ gravel extraction contained spawning ground—that much of the area included prolific fishing grounds, and that further, they strongly objected in principle to the issuing of licences without prior consultation with the industry.
I was amazed by the reply from the Minister of State, Scottish Office. In a letter dated 6 December 1982, Lord Mansfield said:
I am not surprised that the fishing organisations are sensitive about any proposed dredging in the Firth of Forth which contains some very important fishing grounds. Indeed, my Department have already advised the Crown Estate Commissioners of their objection to the use of certain of the licensed areas where prospecting operations could adversely affect fishing grounds. My officials are arranging a meeting with Civil and Marine to discuss these objections. I should, however, stress that the final decision on individual licenses is for the CEC. You may wish to contact them direct.
I find it amazing that the Minister, who is supposed to have overall responsibility for fishing in Scotland, should have to crawl to this curious body to register objections.
12.30 am
In spite of the objections and the representations, the exploration went ahead, and on 30 November the new Minister of State, Scottish Office, Lord Gray of Contin, wrote to me saying that the Crown Estate Commissioners had received an application to exploit the sand and gravel which had been located in four areas off the east coast of Scotland. The first is off Arbroath, where it is proposed to dredge 150,000 tonnes per year for 20 years. The second is off Bell rock, where it is proposed to dredge 500,000 tonnes per year for 20 years. The third is off Dunbar in my constituency, where it is proposed to dredge 500,000 tonnes per year for 20 years. The fourth is near Buddon Ness, where it is proposed to dredge 350,000 tonnes per year for 20 years. That represents 30 million tonnes of material. The part of my constituency that is affected is just one mile from the town of Dunbar, just off Belhaven beach. The area is five miles long and one and a half miles wide. It is a colossal development, which will remove 10 million tonnes of material. It is bound to have an effect on the marine environment and could also have effects on shore.
We do not know what the effect of such development is likely to be on employment, but it is unlikely that any local people will be employed in such an operation. I am sure that it will have a serious and adverse effect on the feeding and breeding habitat of fish. It will therefore create big problems for my constituents who make their living from fishing. It was therefore no surprise to me last week to receive a letter, signed by 63 constituents who work in the fishing industry in Dunbar and North Berwick, saying:
We the undersigned, members of the Dunbar and North Berwick Lobster Association, are deeply concerned about the above dredging application which if granted, would lead to the termination of our engagement in the fishing industry. The area in question is our prime fishing ground and there are twenty boats involved employing a total of sixty men. If granted, this dredging operation would lead to financial ruin, unemployment and hardship not only to ourselves but to our wives and children. This threat is a dark, ominous cloud hanging over our heads as Christmas approaches and we would be grateful if you would do everything possible to ensure that this application proceeds no further.
We may add that the Prawn Fishermen are in exactly the same position and the granting of this application would have the same adverse consequences on them. We are confident of your support and look forward to hearing from you.
They are rightly confident of my support, and they have already heard from me. I understand that there is to be a

meeting on Friday between the developers, the fishermen and the Scottish Office. However, I cannot see how the interests of all concerned can be reconciled. I remain convinced that the Crown Estate Commissioners are not the best people to adjudicate in such a case.
Apart from other considerations, the commissioners are an interested party as part of their function is to get revenue out of the operation. How they can adjudicate with regard to planning I find hard to understand. I am not alone in that belief. I should like to quote from a letter that I received on 3 January from the Earl of Crawford and Balcarres, who is the chairman of the Crown Estate Commissioners. He wrote:
We are not constitutionally well placed as Crown Estate Commissioners to operate a planning control — apart from anything else, we are an inevitably interested party …
My own view is that what may be required in this field is development of a planning control system for the seabed rather than any amendment to the Crown Estate Act.
That is more or less what I am seeking. The unhappy experience of fishermen in my constituency and elsewhere arises from what seems to be a totally unsatisfactory position in respect of the Crown Estate Commissioners for the control of planning of developments on the sea bed. Perhaps the Crown Estate Commissioners make a good enough job of Windsor great park—perhaps not—but they are not the right people to have exclusive and unchallengeable authority over the sea bed, even if they have the benefit of informal advice from the Department of Agriculture and Fisheries for Scotland and its scientists.
Local planning authorities control other physical industrial developments well. They are accountable to their electorates and have no vested interests as such in the way that the Crown Estate Commissioners have. They could extend their planning control over developments on the sea bed. That is what the new clause is intended to achieve. According to my researches, it would put the job of adjudicating development proposals from the point of view of planning on the sea bed in the hands of 22 specific local planning authorities — three regional councils —Highland, Borders and Dumfries and Galloway—three island councils—Western Isles, Shetland and Orkney—and 16 district councils, from Argyll and Bute in the west to east Lothian in the east.
Those local planning authorities would be well able to do the job with the advice of fisheries interests, the specialists of the Department of Agriculture and Fisheries for Scotland and other scientists. They would be able to take those interests into account together with tourism, fishing and other commercial interests. I recognise that one of the authorities I mentioned—Western Isles — would have a colossal area to cover. Presumably, it would become responsible for the big area off the west coast, including Rockall. But why not? The Western Isles council represents people who live near the sea, many of whom make their living from the sea. It is better than the Crown Estate Commissioners, who have been shown by recent experience to be remote, ill-informed and inept in the handling of responsibilities relating to the use of the sea bed off the coast of Scotland.
The Bill is supposed to correct one set of anomalies. I urge the House to take this opportunity to correct another set of anomalies.

The Under-Secretary of State for Scotland (Mr. Michael Ancram): I recognise the persistence of the hon.


Member for East Lothian (Mr. Home Robertson), who has presented the new clause to the House before in similar form. It was previously clause 2 of the Crown Estate (Foreshore and Seabed) (Amendment) Bill that the hon. Gentleman presented to the House in March this year. I am not sure whether on that occasion he gave the House the geography lesson that he gave us tonight, which impressed the hon. Member for South Shields (Dr. Clark), if not many of the rest of us. Clause 1 of that Bill sought similarly to extend the scope of the Town and Country Planning Act 1971, the equivalent statute for England and Wales. The Bill also provided for a register of sea bed rights.
As the hon. Member made clear, his proposal to extend the system of town and country planning in Scotland to the foreshore and sea bed arises from his concern about the system of licensing of activities on the sea bed by the Crown Estate Commissioners. His particular concern is to ensure that applications for activities such as sea-based fish farming and the extraction of marine-based aggregates, which might have adverse effects on sea fishing, should be subject to the system of control that applies to land-based developments and which, in Scotland, is exercised for the most part, but not exclusively, as the hon. Gentleman said, by district councils as planning authorities. So far as the foreshore is concerned, the Planning Acts already apply to any non-Crown development. As the hon. Member is aware, the issue of the Crown Estate Commissioners' rights and duties in relation to the sea bed was debated in the House during the passage of the Miscellaneous Financial Provisions Act in the last parliamentary Session.
During the House's consideration of that measure, my right hon. Friend the Parliamentary Secretary to the Treasury gave an undertaking that the Government would consider whether there was scope for changes to present controls of sea-based developments exercised by means of the system of leasing by the Crown Estate Commissioners. Our consideration of this difficult and complex issue is, I am afraid, not yet complete, but the Government are in no doubt that seaward extension of the system of town and country planning in Scotland would be an inappropriate framework for exercising control. Planning controls do not, and never have, extended beyond the low-water mark. An extension of the planning function to territorial water and, as the hon. Gentleman said, far beyond that, would have to embrace both development plan making and development control. The preparation of comprehensive sea plans would have considerable resource implications for the many authorities that would be involved.
Moreover, authorities would be unlikely to be well placed to assemble and comprehend the data necessary for the preparation of such plans. If only development control were to be extended to sea-based developments, it is difficult to envisage the basis on which planning authorities would derive the expertise that would equip them to determine individual permissions for planning applications. Furthermore, there is much more to development control than merely granting or refusing permission, as I am sure the hon. Gentleman is aware. Complex questions of existing use rights, enforcement and compensation would arise.
The point that is perhaps closest to the hon. Gentleman's constituency heart was his expressed concern

about applications to the Crown Estate Commissioners from Civil and Marine Ltd. to extract marine-dredged aggregates at four sites off the Scottish coast. The sites in question are at Red Head, near Arbroath; Bell Rock; the river Tay near Buddon Ness; and north of Dunbar. I understand that those applications were received recently by the Crown Estate Commissioners and, in accordance with the normal procedures, the commissioners asked the Department of the Environment to co-ordinate a view on behalf of the Government in relation to the applications. Consultations with interested Departments are at present under way, and the views of local fishing interests will be taken into account. It will be some time before the commissioners are in a position to determine the applications, but I assure the hon. Gentleman that the views of local fishing interests will be given full weight.
As the hon. Gentleman knows, representatives of the fishing interests have been invited by the Department of Agriculture and Fisheries for Scotland to a meeting with Civil and Marine Ltd. to discuss the company's specific proposals for dredging for aggregates off the east coast of Scotland. The meeting will be held on Friday of this week. My right hon. and noble Friend the Minister of State has made arrangements, following representations from several hon. Members, for the Forth and Tyne Shellfish Producers Association to be invited to the meeting. We have recently received a letter from the hon. Gentleman expressing the concern of local fishermen of the effect on lobster fishing of dredging off Dunbar. Arrangements are being made for this matter to be considered at the meeting with the company.
I hope that, against that background, the hon. Gentleman will appreciate that, while the Government recognise the genuine concern that has prompted the new clause, we believe that it would not achieve the objectives that he has in mind. Therefore, I hope that he will withdraw the new clause, especially as the Government will soon make their position clear on the control of sea-based developments.

Mr. Home Robertson: I might well do that in about 30 seconds, but first may I press the Minister a little further on some points. He said that the Government will bring forward their proposals for the control of sea bed development, but will he throw a little chink of light on the Government's thinking about this complicated matter? He also said that he thought it inappropriate to extend local planning controls to the sea bed. Which is the appropriate authority? He said that the expertise of local planning authorities might fall short of what was required because of the specialised nature of such operations, yet the Crown Estate Commissioners palpably do not have the expertise either. They cannot be seen as the appropriate body to enforce such control or scrutiny, since they are not accountable and are an interested party. I should be obliged if, in a couple of sentences, the Minister would state the direction in which the Government are going.

Mr. Ancram: The hon. Gentleman has been a Member long enough to know that if the Government are to make a statement on their position it would be wrong of me to give an advance notice of what might be in that statement.
The Government are considering whether there is scope for change in the present controls. I am sure that the hon.


Gentleman recognises that his suggested solutions are unworkable in the context of the sort of decisions and expertise that are necessary to deal with deep water.

Mr. Home Robertson: I am grateful to the Minister for those two opaque sentences. He can take it from me that there is scope for a major review. I and many fishermen in my constituency look forward to hearing something. It is not good enough for the Crown Estate Commissioners to continue exercising these responsibilities. They have not done so very well, and what is now happening is controversial and in some cases intolerable.
We have been assured that the Government will say something, sometime. Hope springs eternal. I have been in the House marginally longer than the Minister, although there is not much in it, but I am a born optimist and I hope that perhaps even this Government can do something useful.
As the views of the fishermen in my constituency will be given full weight, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill reported, without amendment.

Order for Third Reading read.

[Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent signified]

Mr. Macfarlane: I beg to move, That the Bill be now read the Third time.
I must first express my appreciation of the speed with which the House dealt with the Bill's earlier stages. I am particularly grateful to the hon. Member for South Shields (Dr. Clark) and his colleagues for accepting that we were faced with the need for urgent action following the High Court judgment on 22 November, which declared that the informal planning procedures adopted on the disposal of surplus Government land were invalid in certain respects, and for making possible the Bill's, speedy progress.
We may disagree about how much land the Government ought to be selling, but I am glad that we agree so clearly that, when land is being sold, appropriate planning procedures are needed to ensure that the Government obtain the best possible price for it. That is the main thrust of this six-clause Bill. I am grateful for the constructive way in which the hon. Gentleman has approached it, and I hope that it can now speed on its way to another place.

Dr. David Clark: As the Minister has explained, we are considering the Bill in such haste because for the past 20 years—initially under a Government circular, then under section 266 of the 1971 Act and section 253 of the 1972 Scottish Act — many planning applications affecting former Crown land were granted unlawfully. It is amazing that this went undetected and unchallenged for so long.
The fact that this was overlooked for so long illustrates the complexity of town and country planning and the complexities of the Bill. I think that the Minister realises that, although the House has co-operated in rushing the Bill through, there are still anxieties and doubts. I hope that he will ensure that his colleagues in the other place recognise that.
Earlier, the Minister said that, in the rush of getting the Bill before the House, the full consultation procedures

normally pursued could not be followed. In the days ahead, I hope that the Government will take every opportunity to let as many people as possible express their opinion of the Bill. We must get it right this time. I hope that we have helped the Government in facilitating the Bill's passage. We recognise the need for the Bill, but I must stress again that we deplore the way in which the Government have forced the National Health Service in particular to sell off land throught financial constraints. Our support of the Bill must not in any way be construed as support for the Government's policy on the sale of NHS land and property.

Mr. Sydney Chapman: As the Bill received its Second Reading only five days ago, and as hon. Members, at least, did not know until four days ago that the remaining stages would be taken tonight, it would have needed an hon. Member agile of mind and fleet of foot to table an amendment.

Mr. Home Robertson: I tabled a new clause.

Mr. Chapman: Indeed, two hon. Members managed to table amendments. However, those of us who listened to the Minister's excellent contributions last Wednesday prefer to reflect on what he said, and may seek friends in the other place to table amendments if and when necessary.
I welcome the Bill, and should like to thank the Minister for taking up sonic of the points that I raised briefly on Second Reading. I made two points in particular. First, I pointed out that Crown land did not need planning permission, so many planning practices did not apply to such land. I said that it was impossible to put tree preservation orders on Crown land, but that I thought that there might be a case for tree preservation orders or even listed building consent being appropriate where Crown land was being sold. In his letter, my hon. Friend the Minister said that he would consider that sympathetically, with the possibility that the Government might introduce an amendment in the other place. I am most grateful to him for that.
Secondly, and more fundamentally, I said that, where it was intended to dispose of Crown land situated in a green belt area, there must surely be a general presumption that no development might be the most suitable use for that land. If the public is to have confidence in our town and country planning laws and in our development control proceedings, it is important that the Government should be seen to be sensitive about such land in the green belt areas. That is a topical and somewhat controversial matter.
I feel very strongly that there should not be a change in the law. However, where Crown land in green belt areas is thought to be suitable for development for another purpose, I hope that the Secretary of State will make it his practice — under section 35 of the 1971 Act, the principal Act for England, and the appropriate section of the 1972 Act in Scotland—to call in all applications as a matter of course. In particular, I hope that he will hold a public local inquiry. If the Minister reassures me on that point I shall be well pleased. However, I should still prefer it to be written into the Bill.
I apologise for detaining the House, but those two points are important. I am very grateful to the Minister for the sympathetic consideration that he has promised to give to those two points.

Mr. Simon Hughes: I shall detain the House for no longer than the hon. Member for Chipping Barnet (Mr. Chapman), but I want to put several matters on record. It appears from the Second Reading debate, only six days ago, that hon. Members from all parts of the House are unhappy about various elements of the Bill as it stands. They were led to believe by the Minister that he would take on board the concern voiced last week.
The anxieties cover several issues, including the provisions in clause 2 on what happens when consent is not forthcoming. What might happen, for example, in relation to trespassers on Crown land when the Government and local authorities take different views about what should take place and on whether the use of the land should be put back to square one?
Clause 4 also causes concern. It is easy for a Government to wrap up, with regal rectitude, the phrase "Crown land" when we are talking about departmental use of a substantial part of the country's land which does not come within the usual parameters of planning considerations, in spite of the consultation, which normally works well.
The Bill has shown up the difficulties involved when the Crown is master of its own house. When things go wrong, only Parliament can put them right. It has taken us a considerable time to find that anything is wrong and to do something about it. The Minister, speaking for himself, as opposed to the collective for which he takes the responsibility, said that he was not able to look backwards. We want to look forward so that we and the other place have an opportunity soon to discuss at greater length planning constraints and procedures and the possibilities relating to all the different elements of Crown land which form a substantial part of the planning network but which do not involve the same public participation as the rest of our land.
The Government tend to cut corners in planning—a worrying practice. I hope that the fact that this Bill being rushed through is not a sign that the Government want to cut corners even more. Legislation now allows non-public inquiry special development orders. The Secretary of State was defeated in court only two weeks ago on his unwillingness to draw guidelines for the Greater London structure plan.
Th Government have tried to ensure that planning procedures are quick and therefore the democratic processes have not been as good as they have been in the past. I hope that the Minister will take on board our serious anxieties and that there may be some relaxation in the Government's attitude in the other place. I hope that we shall have an opportunity to examine again soon the whole range of planning issues which cause concern to hon. Members in all parts of the House.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Prisons

The Under-Secretary for the Home Department (Mr.David Mellor): I beg to move,
That the draft Eligibility for Release on Licence Order 1983, which was laid before this House on 1 December, be approved.
I make it clear at the outset, that what I am asking the House to approve tonight is not some small inconsequential amendment to the way in which the parole system operates, but a change of the first magnitude and significance. It is a change, furthermore, which has long been called for by a range of people within and without the criminal justice system and extending well beyond the ranks of the Government, and prominently embracing the views of the hon. Member for Knowsley, North (Mr. Kilroy-Silk), whom I am glad to see here tonight.
The following bare statistics will make it clear to the House just how significant are the changes proposed in this flimsy document containing a mere two articles running between them to under 50 words.
At present, prisoners who have served one third of their sentences, or 12 months, whichever expired the later, are eligible to apply for parole. Latterly, each year around 10,000 do so, of whom 5,000 or thereabouts are actually released on licence. Because account has to be taken of remission for good conduct, and because there is also the eminently logical rule that a prisoner released on parole must serve at least one month on licence, the effect of the present rules is to exclude any prisoner from parole who is not serving a sentence of more than about 19½ months. That has been the case since the inception of the parole scheme 15 years ago and has rightly attracted much criticism in the interim.
The effect of the change proposed tonight is that the minimum qualifying period for parole is reduced to six months. That means that, even when remission and the minimum licence period are taken into account, the effective sentence to which parole will apply is reduced from about 19½ months to about 10½ months; that is to say, it is almost halved. The consequence is that some 19,000 prisoners a year will be eligible to apply for parole as against 10,000 at present. Added to that, there will be up to 4,000 young prisoners who will become eligible when the new young offender sentencing arrangements take full effect. While it is impossible to predict with total accuracy just how many of those eligible for parole will be granted it, we anticipate that, as a direct consequence of this proposal, if the House accepts it, the prison population will increase by around 2,500 in a full year.
I hope that, upon consideration of these matters alone, I take the House with me when I say that this is, indeed, a change of profound importance. It is also surely an eminently logical change. For what, after all, can be the logic of continuing to exclude from parole thousands upon thousands of relatively short sentence prisoners while permitting those serving long sentences, presumably for more serious offences, to be eligible? While of course any cut-off point is bound by its very nature to be to some degree arbitrary, by taking the bold stroke of reducing the limit to six months rather than nine months as some suggested, we are replacing the figure of 12 months, which many today do find arbitrary, with one that does have logic.
Given the sophistication of our parole system, it would in truth be difficult, if not impossible, to go through the


proper procedures in time to permit release before a period of six months had been served. Even to get down to six months we have, as I shall later show, had to streamline the necessary procedures somewhat.
The measure therefore is important in itself, but it is doubly important because of its part in the Home Secretary's view and strategy for the criminal justice system as a whole. My right hon. and learned Friend is determined to attain optimum public confidence in the criminal justice system. In pursuit of that laudable objective he is determined to give effect to the public view that the greatest of the many threats posed to our society by crime is the threat of the violent criminal. Violent crime has grown dramatically over the past 20 years and something has to be done to mark out society's abhorrence of the type of mindless brutality we see repeatedly day after day in the newspaper reports. That is why, for the first time, a clear distinction is to be drawn between those in prison serving sentences for crimes of serious violence and those in prison for relatively minor offences. For the men of violence from whose activities it is especially crucial that the public should be protected for as long as possible, parole will be extremely restricted. For those serving sentences of more than five years for violence or drug smuggling, only in exceptional circumstances or in the last few months of a sentence will parole be granted. But correspondingly, and at the same time, those who have been sent to prison—and have got the taste of prison that they no doubt needed— for less serious offences will for the first time, come next July, with the House's approval, have the opportunity to win earlier release. This is a crucial symmetry and I believe in the wisdom of my right hon. and learned Friend's proposals, of which we see one pillar tonight.
On the detail of the matter, section 60 of the Criminal Justice Act 1967 established the parole scheme and empowered the Secretary of State to release on licence a person serving a determinate sentence after he has served not less than one third of his sentence or 12 months thereof, whichever expires the later. As a result of the interesting debates on the Criminal Justice Act 1982, initiated by the hon. Member for Knowsley, North, my right hon. and noble Friend the then Home Secretary inserted section 33 into the 1982 Act permitting the Home Secretary to provide a lower period than 12 months by order subject to affirmative resolution.
The delay was made necessary by the need to study in detail the resource implications and the practicability of implementing such a change. We need to understand that the parole system is a properly sophisticated and complex one. Parole consideration in each case requires reports from relevant prison staff, an assessment of release arrangements by a probation officer in the area to which the prisoner will go on release, consideration by the local review committee at the prison holding him, and consideration in the Home Office of the local review Committee's assessment. All that takes time, and that is why I say that the minimum practicable period is six months.
In describing the way the new system will work, I should like to make one point abundantly clear. The minimum qualifying period is being reduced by this proposal—but for the prisoners who will benefit from this change, the assessment of risk which underpins each parole decision will proceed in precisely the same way as previously. The question, as ever, will be to weigh in the

balance the benefit to the inmate, and indeed the community, of early release under licence, properly supervised by a probation officer, against the risk to the public of having a sentenced offender prematurely released from custody. That requires difficult, individual decision-taking, which will continue to be applied with the same care and rigour as hitherto. Nothing less would be acceptable to the Government, the House or the country.
But to make the change we propose, the existing procedures will be modified and streamlined to take account of both the greater ease of striking this balance in the case of prisoners sentenced to two years and under, and of the more pressing time considerations that apply with shorter sentences. There will therefore need to be a presumption in favour of parole, but I stress that that is not a novelty, as it is the case with the less serious shorter sentence inmates under the existing scheme.
Reporting and selection procedures will, therefore. be primarily aimed at identifying those inmates who might be bad parole risks. The cases will be processed as quickly and routinely as is practicable. Abbreviated report forms have been devised for use in the prisons, and a standard release plan report will replace discursive home circumstances reports used for existing cases to minimise the work of the probation service.
Similarly, in view of the time constraint, these cases will not normally be referred to the main parole board itself for consideration. Those found suitable by local review committees at the prisons will be dealt with as in existing arrangements under section 35 of the Criminal Justice Act 1972. That empowers the Secretary of State, with the agreement of the parole board to release certain classes of prisoners on the recommendation of the local review committee without reference to the parole board. It is presently used in respect of all those serving sentences of less than two years, or those serving sentences of less than four years where the offence did not involve violence, sex, arson or drug trafficking.
What we intend is that in future all inmates serving sentences of less than two years will be considered by the local review committee between two or three months before their parole eligibility date, so that consideration in the Home Office of final release arrangements can be completed in time for their release, if agreed on that date. Reporting in the prison will have started about one month before that, and even before that the probation service would have been consulted about a release plan so that there is sufficient time for any arrangements to be made.
Prisons and youth custody centres will have to face a considerable task in identifying eligible inmates, and in the case of those eligible on or soon after 1 July work will be starting early in the new year. I should explain that, because of the complexity of these arrangements, it has not been possible to find an earlier commencement date than 1 July next year.
I am confident that all those concerned in the prison service and probation service will tackle this challenging task with efficiency and dedication. There will, of course, be considerable additional work for the local review committees. Indeed we see a need to recruit some 200 additional independent members of prisons and youth custody centres throughout the country. These committees perform a very valuable public service and are an essential part of the parole system.
I hope that many public-spirited people will come forward for consideration for this important work.


Anybody who is interested should get in touch with the governor of the prison or youth custody centre nearest their home.
I end as I began. The passage of this order will mark a real step forward in the development of our penal policy. It is a proposal behind which I hope the House will unite, because, whatever else we may disagree about, there surely can be little argument as to the wisdom of what we now propose.
It is a tribute to my right hon. and learned Friend the Home Secretary that so early in his period of office he has been able to build on the work of his noble predecessor and come before the House with this proposal. It is a carefully thought out and properly resourced proposal which has a significant role to play in my right hon. and learned Friend's balanced thinking on the criminal justice system, which involves cracking down on the men of violence while at the same time recognising that fresh and imaginative thinking has a real part to play lower down the scale of seriousness. I commend the order to the House.

Mr. Alfred Dubs: The House does not often have a chance to debate prisons. Therefore, I welcome the opportunity given to us by what will be a short debate at this late hour to discuss a proposal with which my hon. Friends and I are in agreement—the idea that there should be improved facilities for parole for short-term prisoners.
However that proposal must be set in the context of a point that the Minister failed to mention. That is the crisis in our prison system, which must be one of the main reasons why this proposal has been discussed by many people for many years before being brought forward tonight. The crisis in our prison system is such that we have about 44,000 prisoners and incredible overcrowding, with prisoners on remand being held in police and court cells in many parts of southern England. It is surprising that the Minister did not mention that as one of the factors that prompted the sensible proposal that he has introduced.
I believe that the origin of the proposal, certainly from the Home Secretary's point of view, was a speech that the right hon. Gentleman made to the Conservative party conference earlier this year, in which he made a number of related proposals about the prison system. This is not the time to debate them in detail, but in passing I might mention that he said that he would also introduce a scheme to enable fine defaulters, drug addicts and mentally disordered offenders to be released from prison. I hope that such a proposal will soon be forthcoming.
The Home Secretary also discussed the prison building programme, which is obviously sensible if it replaces our old, decaying, Victorian prisons with decent modern ones with adequate sanitation; in other words, if we replace Brixton, which is on the verge of falling down, by Woolwich. But it will not be such a good proposal if it simply means that there will be more prison places which will then be filled simply because they are available. We must be careful about that, and we must be careful about the fact that the proposal is put forward not in the context of a broader set of proposals, such as an extension of non-custodial measures.
The Home Secretary also mentioned in that famous speech his proposal to restrict parole in respect of prisoners

serving five years or longer who had been sentenced for violent or drug offences. Perhaps we shall have an opportunity to debate that, along with the other proposal that prisoners serving life sentences should serve at least 20 years for a whole range of offences.
The scheme before us tonight has its merits. The parole scheme was introduced in 1968 and, since its inception, has shown, clearly that many sentences can be reduced in length without any risk to the public. Indeed, most prisoners in our gaols are released at some time, and one of the challenges to our penal system is that they should be released when they represent the least threat or danger to the public among whom they must live.
As the Minister said, about 10,000 prisoners a year are considered for parole. In 1982 the figure was 9,912, of whom 5,180 were granted parole. In that year, only 593 prisoners who had been released on parole were recalled to prison during the parole period. Of those, fewer than half were recalled because they had been convicted of further offences. In other words, the record of parole is good. There is a low rate of re-offending. All the evidence, including quite extensive research, supports the view that the combined effect of parole supervision and the threat of recall to prison have reduced significantly the probability of offenders being reconvicted. That is a good record, especially when set against the likelihood of other offenders being reconvicted when they have had different types of sentences.
Reducing the qualifying period for eligibility for parole from 12 months to six months contributes to alleviating prison overcrowding in two ways. First, short-term prisoners previously ineligible will be considered for parole and, secondly, prisoners serving between 18 months and three years will be considered earlier for parole. As the Under-Secretary said today and in answer to a parliamentary question some time ago, it is estimated that this measure will reduce the prison population by about 2,500, and that is a worthwhile achievement.
The scheme has some implications. The Under-Secretary mentioned the fact that the task of assessing prisoners eligible for parole must start early in the sentence of prisoners who are serving the shortest of sentences covered by this scheme. That will place quite a burden on those responsible for making the assessment.
One point that the Under-Secretary did not mention —I was a little surprised at the omission—was that the scheme will place extra responsibilities on the probation service which must supervise parole. What assessment has the Home Office made of the burden on the probation service? Will this require any additional probation officers? I cannot help feeling that the measure is bound to require additional probation officers to ensure that the scheme works sensibly.
All in all, this is a good measure, but, alas, it is in contrast to the Home Secretary's other measures which are less welcome. I especially regret that the move that the Under-Secretary has outlined is not accompanied by a parallel attempt to alleviate one of the problems of short-term prisoners which contributed to their ending up in prison in the first place — the inadequacy of accommodation. Will the Home Secretary do anything to increase the funding to those organisations that provide hostels for ex-prisoners and those that provide other types of accommodation so that when prisoners are homeless they have somewhere to go on their discharge from prison?


Such hostels represent good value for money. There will be much more pressure on those people because of these proposals.
In the 1983–84 financial year, the Home Office is financing, I understand, all forms of hostel accommodation to the extent of £11 million. That compares with a prison building programme of about £250 million. Do we have the balance right? Should we put more money into facilities for prisoners who are to be discharged and who will require a stabilising influence on their lives so that they can obtain jobs, live sensibly and not get into further trouble?
The Home Secretary claims that he has achieved a balanced approach in all those matters, but I contend that he has tipped the balance — although this measure is worthwile—the wrong way. I am especially concerned about his proposals for limiting parole to prisoners sentenced for five years who are in gaol for violent or drug offences. It is feared that the proposals are a recipe for violence in prisons, will impose an additional and difficult burden on prison officers and will deprive the prisoners of hope as they will have little to lose. The proposals ignore the possibility that some of those prisoners, no matter how odious their offences, are capable of changing their attitude, feeling remorse, achieving maturity and becoming better citizens. Yet they will have to serve longer sentences than they do now even if they show signs that they would become good citizens if they were discharged.
Many distinguished people, including the former chairman of the Parole Board, Lord Hunt, have expressed their concern, which I share, about the proposal. Worst of all, the Home Secretary has tipped the balance by encouraging a greater use of prisons and custody.

Mr. Deputy Speaker (Mr. Harold Walker): Order. I have given the hon. Gentleman considerable latitude, but he must confine his remarks to the narrow terms of the order.

Mr. Dubs: Thank you, Mr. Deputy Speaker. I shall skate over the issue that I was about to develop. The proposals in the order are welcome but they contrast with a failure of the Home Office to tackle the overcrowding in our prisons in ways that are open to Home Office Ministers. Our country has a record that is not at all good. I fear that these measures will not make people feel more secure and will not reduce burglaries and other crimes in inner city areas, which is to be regretted.
The order should be welcomed. I only regret that it is not set out in the context of a wider set of proposals that would do more to tackle the crisis in our prisons. However, I welcome it and hope that it will be implemented speedily and effectively.

Mr. Robert Kilroy-Silk: I welcome the order because, as the Minister rightly said, it implements the principle of an amendment that I moved on behalf of the parliamentary Labour party penal affairs group when we were considering the Criminal Justice Bill.
I welcome the order for four main reasons. First, when fully implemented, it will substantially reduce the prison population by a daily average of about 2,500. That is extremely important when set against overcrowding in our prisons, especially local prisons, which will be the most affected when the order is fully implemented.
Secondly, it is extremely useful, because it will reduce the level of re-offending. My hon. Friend the Member for Battersea (Mr. Dubs) said that the Home Office has provided testimony to the efficacy of release on licence under supervision, subject to recall, in reducing the rates of re-offending and of re-conviction among criminals.
Thirdly, the order is welcome because it will reduce a serious inequality to which attention is drawn most frequently by Lord Justice Waller. Many offenders, who are perhaps the least serious, are often released on precisely the same day as more sophisticated and serious offenders who were convicted of the same offence at the same time. For example, the ringleader of a group of individuals may be sentenced to three years' imprisonment, whereas a junior member of the gang is sentenced only to 18 months' imprisonment. Both men may be of previous good character. At present, only the one who is sentenced to three years' imprisonment is eligible for parole, so they may both be released on exactly the same date. That is clearly inequitable and unfair. The order will remove that anomaly.
Fourthly, the order is welcome because it will save money. That is a not inconsiderable feature. I acknowledge that the implementation of the order will involve a considerable increase in the work load of the Home Office. It will have to process 12,500 cases or more. The Minister has said in parliamentary answers that about 100 extra prison staff will be required and 80 additional probation officers. Another 25 officers will be required in the Home Office headquarters. The net cost will be about £2·25 million overall when allowance is made for the reduction in the cost of providing food. That may seem to be a considerable price to pay for releasing 2,500 nonviolent, non-dangerous, petty offenders. However, if one assumes, as I hope one can, that the introduction of the order will mean less reliance being placed on the use of police and court cells and the Home Secretary fulfulling his promise to end the use of police and court cells by the end of the year, we may make a more considerable saving.
It costs £100 a night for a prisoner to be accommodated in a court cell. As the average number accommodated each night is about 200, the total cost over a year is about £11 million. We are setting alongside the additional cost of £2·25 million a potential saving of £11 million by not using police and court cells. That is a not inconsiderable gain, and it is certainly one to be welcomed. Perhaps the Minister will reiterate when he replies whether the Home Secretary will fulfil his promise to end the use of police and court cells for remand prisoners, and, if so, by what means and when.
Many of the prisoners that we are discussing will be released earlier into the community, but many of them should not have been imprisoned in the first place. The Minister will know that we imprison a higher proportion of our citizens for longer periods than any other country in western Europe.
We are increasing rather than decreasing the use of custody. Fifteen per cent. of adults convicted of indictable crimes in 1974 were given immediate sentences of imprisonment. In 1982, the figure was 19 per cent. They are not all violent or dangerous offenders. Many of them fit precisely into the categories covered by the order. Only one fifth of the 44,000 offenders in the prisons today, mentioned by my hon. Friend the Member for Battersea, have been convicted of violent offences, sex offences, robbery, arson or drug trafficking. The vast majority are


non-violent offenders who could more properly be dealt with and supervised in the community by established community facilities.
If those facilities had been established in the past, or if the Government were prepared to establish them now, we would not need to debate this order or to deal with so many people by imprisonment. Only 6 per cent. of adults convicted of indictable offences are given community service orders, even though those orders have been highly successful in keeping people out of prison, ensuring that they make some reparation to the community and successfully complete their order. There is scope for an extension of those orders.
The Government are increasing expenditure on prisons, yet the probation service committees are having to ration the number of community service orders that they impose. Because of the lack of facilities for community service orders, people are ending up in prison and having to go through the whole process that has been described at additional bureaucratic and financial expense that is absurd. It cannot be justified on any grounds. More resources are needed, so that we can avoid the problems that we have been discussing.
Greater emphasis on probation orders and packages is also required. A probation order — if allied to a condition of residence in a hostel or housing scheme, attendance at a day centre or participation in an employment project—will have credibility in the eyes of the court and be effective in dealing with and stopping non-violent offenders from offending again and returning to prison.
The evidence of the university of Lancaster's centre for youth crime and the community shows that if such a package were available in certain areas, the courts would use it and fewer people would have to go through the long bureaucratic process of being considered for earlier release on parole. They would have been dealt with beforehand more effectively in the community.
The Home Secretary is spending a great deal of taxpayers' money on building new prisons, at a time when considerable cuts are being made in our health and social welfare services. I do not quarrel with the need for new prisons, but if the Home Secretary seriously wishes to shift the emphasis from custodial sentences to dealing with and supervising people in the community, this order —welcome though it is, and delighted though I am that it is to be implemented—is not enough. The Home Secretary should show a clear desire to give more resources to the probation service and to provide facilities in the community, so that the ideal of dealing with people effectively in the community can become a reality. We need a clear sign from him that he is aware of the balance necessary between providing the prison places which are desirable and necessary and the resources to deal with nonviolent and non-dangerous offenders within the community.
Welcome and enlightened though this measure is, it is unfortunately besmirched by what the Home Secretary is doing at the other end of the parole spectrum. I understand the political difficulties with which he was confronted on 11 October when he faced the Tory party conference. I have written in another place about the balance that he had

to achieve in front of that baying mob between what he knows to be right and proper and what he could find to be politically acceptable.
The Home Secretary is wrong to impose a blanket prohibition on parole for those who have been sentenced to life imprisonment or to five years or more for offences of violence. It is part of the parole order, and it is unjust to impose it on prisoners who are serving sentences. No doubt like other hon. Members, I have received dozens of anguished, muddled and confused letters from prisoners who feel that all their hopes of rehabilitation and reintegration into the community have been dashed by what the Home Secretary has done. All their plans and those of their families have been suddenly jeopardised and undermined. That is regrettable.
The instructions the Home Secretary gave to governors before his speech, and in anticipation of it, showed that there might be violence and unrest in our prisons. Prison officers have made public statements to the effect that the introduction of these proposals is likely to increase violence and unrest in our prisons. It is unfortunate and regrettal be that the Home Secretary should have found it necessary to introduce such proposals. It is unfortunate that, although I welcome this progressive and enlightened measure, I have had to make some churlish remarks.

Mr. Simon Hughes: The Liberal party joins the Labour party in welcoming the order, which the House will no doubt endorse overwhelmingly. Our prisons have been filled unnecessarily in recent years because people sentenced to the shortest terms of imprisonment have not been able to have them reduced. We have heard examples of how people are treated unequally in relation to their sentences.
It is hoped that this measure will reduce the number of people in our overcrowded prisons by 2,500 and that, if continued, it will begin to restore our position in the league table. We unfortunately lead the league table of the countries in western Europe with the highest percentage of our population in prison. Prison has proved to be ineffective. Crime has increased no less here than elsewhere. There is no direct correlation between the length of prison sentences and the amount of crime.
Through this measure the Home Secretary is showing that a short loss of liberty—the "taste of imprisonment" as the Minister said—is important. Non-violent, first-time and young offenders are unlikely to want to repeat that experience.
I also should like to express sadness at the Home Secretary's written answer which followed his speech to the Conservative party conference in October. The Parole Board has protested that there will now be interference between the two functions which have necessarily been kept separate in the administration of criminal justice. The first is the sentencing system, whereby judges adjudicate as to the right punishment for a crime. After that is the parole system, which should remain separate. It is a case by case adjudication of whether a person can be released and what risk such a release would be to the community. There has been much complaint in the newspapers and in letters to newspapers that there is now a muddle because of the Home Secretary's insistence that people who are sentenced to specific categories of crime and serve more than five years will lose—

Mr. Deputy Speaker: Order. This is not a Second Reading debate. The House can debate only what ought to be in the order. I hope that the hon. Gentleman will confine his speech to the substance of the order.

Mr. Hughes: My point is relevant in that we are considering a system by which the local review board, not the Home Secretary adjudicates case by case. I hope that the Home Secretary will reconsider the important principle that an individual is entitled to be considered as an individual for release on licence. The risk to society that such a process poses to society should be considered separately in each case. The threat to that principle by the statement made a fortnight ago makes the subject relevant now.
I should like to ask the Minister two questions, which he might not be able to answer now. The Home Office began its consideration of the alternatives by setting up day training centres in the 1970s. They were pilot studies and one was in Camberwell. How has their success or failure affected the Home Office's thinking? Their effect has been completely lost in the intervening years.
I recently asked the Home Secretary whether he would reconsider—and what his reasons were if he would not — the refusing of parole when it was recommended regularly. A person should know why he or she does not receive the real results of a positive recommendation for release on licence. The order shows that Government's willingness to reduce the prison population and to enable people to know when their sentence will end. The date of release is the light at the end of the tunnel for a person who is being locked up. Will the Minister examine other methods of enabling people to see that light at the end of the tunnel?
We welcome the measure. It is one step, but we look to the Government to take many more steps down the same road so that the prison, sentencing and release systems take into account the individual cases, and to make sure that we do not have, as we have in the past, a prison system that does not allow for the individual's rehabilitation. It is this rehabilitation that we in the Liberal party have long been arguing should be the prime consideration of our criminal justice policy.

Mr. Mellor: With the leave of the House. I shall not be able to reply to all the points that have been made, some of which go far wider than the order. Hon. Members will know that I should be happy to deal with any matters that they want to pursue in correspondence.
I am grateful for the warm-hearted welcome that the measure has received. I also welcome the recognition that anything less than a warm-hearted welcome for a move of this significance would fall below the level of events. My right hon. and learned Friend the Home Secretary will be glad of the recognition that he, like my noble Friend his predecessor, is able not only to identify major changes in the criminal justice system that need to be carried forward but to fight for and obtain the resources necessary to carry through those measures—something, I am afraid, that not all previous Home Secretaries were able to do. Opposition Members need to reflect on that point when they look at the record of past Labour Governments in that respect.
The truth is that no Government have done more than this Government to alleviate the crisis in the prisons that

we inherited. Prison numbers are down well below the peak of 1981. We shall bring on stream in the next decade about 5,000 places in 10 new prisons and 4,000 refurbished places in old prisons where basic sanitation and so on is put in, which is a crucial, humane response to the problems in our prisons and something that we have tackled where others have failed.

Mr. Kilroy-Silk: Will the Minister give way?

Mr. Mellor: It is very late. I would not have the House with me if I were to give way.

Mr. Kilroy-Silk: rose—

Mr. Deputy Speaker: Order. The Minster has made it clear that he is not giving way. The hon. Member for Knowsley, North (Mr. Kilroy-Silk) must resume his seat.

Mr. Kilroy-Silk: Will the Minister give way?

Mr. Mellor: I have made it clear that I am not giving way. I was asked to respond.

Mr. Kilroy-Silk: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman must not persist. He has been here long enough to know that if the Minister does not give way, he has no right to intervene in the debate.

Mr. Kilroy-Silk: The Minister is chickening out.

Mr. Mellor: I am not chickening out. The hon. Gentleman knows only too well that I am capable of answering any question that he asks me, but it is too late. I have been led into areas in my response that it is important to put on the record, about our plans, but it would not be in the interests of anybody to go too far beyond the order.

Mr. Kilroy-Silk: Will the Minister give way?

Mr. Mellor: I shall not give way. It is no good the hon. Gentleman asking. I said that I would not give way, and I shall stick to it.
The hon. Gentleman was right to say in his speech that considerable extra resources are required. They have been properly provided.
We remain committed to the approach that many hon. Members have endorsed, that prison sentences should be passed only when absolutely necessary. To that end, we strengthened the probation service by the same proportion as the police force, although that has not so often been remarked upon. We have also very much strengthened probation and ancillary services to ensure that as far as possible community service orders and so on proceed properly. We remain committed to an enlightened policy on the criminal justice system, but we also recognise the need to be realistic—

Mr. Kilroy-Silk: Will the Minister give way?

Mr. Mellor: I have made it clear that I shall not give way.

Mr. Kilroy-Silk: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman is pushing his luck. I ask him to resume his seat, as the Minister will not give way.

Mr. Mellor: The hon. Gentleman knows only too well that I give way to him with monotonous regularity in


Committee. I shall not give way to him, on matters that are outwith the debate, at nearly 2 o'clock in the morning. I am sure that it is the will of the House that I conclude now.
My right hon. and learned Friend the Home Secretary believes that it is crucial to keep public confidence at the optimum level in the criminal justice system. To do that, we must come to terms with the public view of the gravity of the crime problem, and especially the problem of violent offenders. That is why—not because of a need to pander to the Conservative party conference — my right hon. and learned Friend took the view that he did on the restriction of parole for the worst violent offenders. In that way we can ensure public confidence. If we mean what we say—that violent offenders must be set apart, and that they pose a fundamental threat to society, we must give effect to that in our actions. The twin pillars of our policy on parole —on the one hand, restricting parole availability to serious offenders, while on the other hand making it available more readily to minor offenders—achieves that aim, and will strike a real blow in continuing an enhanced public confidence in our system.

Question put and agreed to.

Resolved,
That the draft Eligibility for Release on Licence Order 1983, which was laid before this House on 1 December, be approved.

STATUTORY INSTRUMENTS, &c.

SOCIAL SECURITY

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &amp;c.).
That the draft Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 1983, which were laid before this House on 16th November, be approved. —[Mr. Sainsbury.]

Question agreed to.

HOUSE OF COMMONS (SERVICES)

Ordered,
That Mr. Lawrence Cunliffe and Mr. Walter Harrison be discharged from the Select Committee on House of Commons (Services) and Mr. Andrew Faulds and Mr. Peter Shore be added to the Committee.—[Mr. Cope.]

BUSINESS OF THE HOUSE

Ordered,
That, at the sitting on Wednesday 14 December, the Order relating to Select Committees Related to Government Departments may be proceeded with, though opposed, for one and a half hours after it has been entered upon and, if proceedings thereon have not been disposed of by that hour, any Amendments, which may have been selected by Mr. Speaker, may be moved, the Questions thereon shall be put forthwith and Mr. Speaker shall then, put the main Question; and thereafter the Motions relating to Agriculture, Defence, Education, Science and Arts, Employment, Social Services and Welsh Affairs, may be proceeded with, though opposed, for one and a half hours after the first Motion has been entered upon, and if proceedings on the Motions have not been disposed of by that hour any Amendments to the first Motion, which may have been selected by Mr. Speaker may be moved, the Questions thereon shall be put forthwith, and Mr. Speaker shall then put the Question upon the said Motion and any Questions necessary to dispose of the other Motions and of any Amendments moved thereto which have been selected by him; and that, notwithstanding the practice of the House, each Motion shall be regarded as a single Motion.—[Mr. Cope.]

Straw Burning

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]

Mr. Michael Lord: I am grateful for the opportunity to hold this Adjournment debate on straw burning, which this summer created many problems in my constituency of central Suffolk, in East Anglia generally, and in other parts of Britain where cereals are grown extensively. I am sure that those hon. Members who have stayed to hear the debate are aware of the background to the problem, but perhaps I may briefly sketch it in.
Although straw and spoiled hay have always been burned to some extent, there was no problem of any magnitude until about 10 years ago. Since then, cereal acreages have increased rapidly, and the utilisation of straw by livestock of all types has reduced just as quickly. That has been especially noticeable in the eastern counties, and has created and magnified the need for farmers to burn. Even in the past few months, Aujesky's disease slaughterings have reduced the need for straw for pigs even further. It is not just cereal straw that is burned, but stubble and the residues of rape and pulse crops. During those years, transport costs have increased so rapidly that the traditional baling of straw in the east of England for sale to stock farmers in the west has become uneconomic.
The principal reason for burning straw is that it is the quickest, cheapest and, for many farmers, the only way to get rid of the quantity produced. It allows farmers to prepare their winter seed beds rapidly and to get next year's crop drilled. Additional advantages have emerged in recent years, in that the practice kills off weed seeds and, on heavy soils, helps to break the soil down to allow quick cultivation and the early production of a seed bed. The ash resulting from the burning is rich in potash, which obviously has a fertiliser value. So straw burning has built up during the past few years and has, in many areas, become an integral part of the cereal-growing process.
There have been some examples during the years of problems with burning, but the general public's attitude has been one of unease rather than of opposition. Unfortunately, this harvest time in East Anglia was unusual, in that a long dry spell — which made everything tinder-dry — finally coincided with high winds, which not only fanned the flames where fields were being burned but blew the ash produced far and wide for some time afterwards. In my constituency, that caused problems, not just for householders whose houses were invaded by smuts, but because those smuts blew into the hearts of towns and got into offices and shops.
Indeed, farmers themselves suffered. Crops of lettuces were ruined by ash from neighbouring farms, and standing corn crops were even set alight. There has been damage to hedgerows, trees and woodland, and fire brigades have been called out to fires out of control.
I have heard some people argue that this was an exceptional year and that we must not get things out of proportion. I cannot agree. I agree that it was an exceptional year, but having brought matters to a head, the public's unease has now manifested itself in direct opposition. This problem will not go away, and for the sake of everyone concerned must be dealt with as a matter of urgency.
When I say for the sake of all concerned, I refer not just to householders, office workers and others who have suffered as a result of smuts, not just to the damage to the environment where this has occurred. I am just as concerned about the image of farmers in my constituency and elsewhere, which is under severe pressure and which can be damaged considerably — often unfairly — by things such as straw burning.
I want to make it clear that all the farmers in my constituency are concerned about the problems that straw burning can cause. They are acutely aware of the general anxiety that exists and are already making every effort to seek out safer methods of burning. More particularly, they are taking the initiative in the search for alternative uses, an example of which I shall give shortly. They are being aided in their efforts by the NFU, which is also well aware of the problem. It is clearly in everyone's interest to tackle this as a matter of urgency.
I do not believe that there are any simple solutions. This practice has grown up over a number of years. Therefore, an immediate ban or even a too-rapid phasing out would not be either fair or workable, as the amount of straw involved is enormous and alternative uses are not yet available. Indeed, a grave fire risk could be created if in a hot, dry harvest period our fields were left full of unburnt straw for any length of time.
The NFU position is:
Our long-term objective is to see burning as a means of straw disposal made unnecessary".
That is a helpful approach, although I am not sure that some definite date for ending straw burning completely might not be a good idea eventually, provided that it was set far enough ahead to give everyone a chance to readjust.
At present we produce between 13 million and 14 million tonnes of straw, 50 to 60 per cent. of which is used or consumed on our farms in traditional ways. This still leaves 6 to 7 million tonnes to be dealt with, of which 1 or 2 per cent. is incorporated back into the soil in one way or another. Incorporation or ploughing back is clearly a useful way of getting rid of unwanted straw, and although there are limits to how much straw can ultimately be ploughed back every year, particularly on heavy land, this line ought to be pursued further.
Government research is currently being undertaken into this problem, and I hope that the rumours I have heard about the possible disruption of this research are not well founded.
Much of the remainder of the straw is used in a variety of ways. Some is treated on farms with ammonia and used for feeding to stock. Some is manufactured into pellets and used as pig food. In my own constituency, firms such as Stramit produce straw board, which is used extensively for partitions in housing and by the building industry generally. Machines are now being introduced to produce briquettes for domestic fuel. In the past, straw has been used to produce paper and various chemicals for use in industry. Some county councils are now experimenting with straw to heat schools, and other obvious examples are the heating of glasshouses and grain drying plants.
One particularly interesting possibility pursued by a group of farmers in my constituency is the chemical treatment of straw to produce nuts that can then be sold to the paper-making industry as a substitute for hard wood pulp. I understand that these nuts are mixed with wastepaper, and are used to produce brown paper for packaging. Without getting too technical, the advantage

of this process over normal papermaking is that, as the end product is only packaging paper, it is possible to leave the lignin in the straw. It is the removal of this lignin that causes great effluent problems in normal papermaking.
Since this particular product would be a substitute for hardwood pulp, the saving both in trees and in imports if it was successful is obvious. I understand from the farmers concerned in the project that they have a real hope that it will be financially viable.
Clearly, one could go on making suggestions for alternative uses for quite a long time. The important thing, which must be accepted, is that it makes no sense to produce an expensive form of energy—which straw is—with all the costs involved in terms of land, machinery, labour and chemicals and so on, and then simply to set fire to that source of energy, often, in the process, causing considerable inconvenience to neighbours and frequently, damage to the environment.
Clearly what is needed is a real determination to push forward, to discover more alternative uses for this valuable product as fast as we can. In the meantime, next year's corn is already growing and harvest will all too soon be upon us. It is too much to expect that any significant, alternative uses will be making an impact by next summer. What must be in place by then are carefully and tightly drawn restrictions, which make sense to farmers and to the general public, and which can and will be enforced by law.
The code of practice for straw burning, which the National Farmers Union has worked out, useful though it is, clearly has not been sufficient in itself to solve the problems this summer. I understand that the Government are now working on a new model bylaw. I hope that it will be produced as soon as possible. It is important that the same restrictions should apply nationwide, so that everyone knows exactly where he stands. These restrictions must be spelt out in good time, and clearly, to all corn growers.
Perhaps a system of licensing might even be considered if need be, with licences being issued for an appropriate fee, based on acreage, and licences being withheld from offenders. Existing bylaws vary, are often inadequate and have far too seldom been properly enforced. With one notable exception in north Yorkshire, fines of any size have been few and far between. This is not in the farmers' interest. Indeed, many farmers I know are annoyed that bylaws have not been properly applied and that fines of sufficient size have not been imposed. Many of them believe that this would have had salutory effect not just on the irresponsible farmer concerned, but on the whole industry. In my view, most farmers who burn their straw do so responsibly. It is the minority, as always, who give the industry a bad name. That is all the more reason for punishing that minority.
In summary, I believe that, on balance, straw burning is wasteful. This last summer has shown that it can quite frequently be harmful. When carried out irresponsibly, it harms not only the countryside but the image of our farmers who are its custodians. In the interests of the environment, the farmers, and also the best and most sensible use of energy, heads must be put together without delay, with the maximum encouragement and support from the Government, in order that sensible and alternative solutions can be found as rapidly as possible.

Mr. Edward Leigh: rose—

Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Gentleman have the agreement of the hon. Member for Suffolk, Central (Mr. Lord) and the Minister to intervene?

Mr. Leigh: I believe that I do.

Mr. Deputy Speaker: Very well.

Mr. Leigh: There is no doubt that straw is literally a burning issue in my constituency. I represent 750 square miles of rich agricultural land in Lincolnshire and my constituency is the twenty-ninth most heavily involved in agriculture in the whole country. Hon. Members would not expect me, therefore, to suggest that straw burning should be banned outright. Such a solution, as my hon. Friend the Member for Suffolk, Central (Mr. Lord) has explained, would have disastrous consequences not only for the prosperity of farmers, but for the whole area, and for the ultimate cost of our food. Nor would such a solution necessarily solve the problem.
According to the local newspaper:
Only half the fire calls to Lincolnshire farms during the two month harvest period resulted from straw or stubble burning according to county fire service figures…Mr. David Hill, the Secretary of the Lincolnshire County Branch of the NFU said: 'During the harvest the whole countryside can become a tinderbox.' In Lincolnshire alone we produce more than a million tons of straw and this is at risk from overheating machinery, discarded cigarette ends and children with matches for as long as it takes for farmers either to bale it or, in the case of the 800,000 tons or so for which there is no use to burn it under controlled conditions.'
A ban on straw burning would not be a solution to the problem.
I represent not only people involved directly or indirectly in agriculture but the people in 170 villages. A number of parish councils wrote to me in the summer expressing justifiable concern about straw burning. It was a real problem, causing considerable dislocation and nuisance. This has led me to believe that something must be done.
In seeking to resolve the problem we should recognise that up to now it has been approached in the wrong way, as an issue of farmers versus the rest. We should accept straw is a waste, like waste in any other industry. As in other industries there has to be a code of conduct setting out how it should be disposed of by the farmers. Local and central Government have a responsibility for the disposal of the waste.
I believe that the farmers must tighten their code. This they are doing, though the NFU and local authorities such as east and west Lindsey in my constituency must be more vigorous in their prosecution of offenders. Good fanners, the overwhelming majority, recognise the fairness of that. They take great care and resent the activities of a few who sully the names of the many.
The Government must pursue their excellent research into alternative uses. Straw is a national resource which, in the interests of our environment and conservation must be exploited and not simply burnt away in a puff of smoke. Exciting new processes to harness straw exist, for example in board making in my constituency. If we pursue them, the whole community will gain.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I congratulate my hon. Friend the Member for Suffolk, Central (Mr. Lord) on raising this important issue for debate this evening. This season's burning of straw and stubble caused a great deal of concern to the public, which I know many Members of this House share. Much of the damage and nuisance took place in and around my hon. Friend's constituency, and indeed elsewhere in East Anglia, though other parts of the country suffered too. We had a traumatic experience in my constituency in north Kent.
The Minister of State would have liked to be here. He is a neighbour of my hon. Friend the Member for Suffolk, Central and particularly wished to be here but he was required to attend the Council of Ministers in Brussels.
My colleagues and I at the Ministry of Agriculture were extremely concerned at the extent of the problems associated with this year's straw burning, and we resolved to take action to ensure that the risk of any repetition would be reduced to the absolute minimum. The first step that we took, early in September, was to seek to establish precisely what the main problems had been and why they had occurred. This was achieved quickly through a review by my Department's regional offices. As a result of this review, my right hon. Friend the Minister announced on 13 October his intention to discuss with the Home Secretary ways in which the model byelaw could be strengthened. This forms the basis for all the byelaws made by district councils. The majority of district councils in cereal-growing areas do have such byelaws and a number of prosecutions have been and are being pursued.
Most of the trouble associated with straw burning in this year's dry weather conditions would have been avoided if a small and inconsiderate minority of farmers had not ignored the commonsense provisions of the existing National Farmers Union code of practice on straw burning. I believe that more stringent byelaws, based on a strengthened NFU code, will go a long way towards reducing the problems arising from straw burning.
In the discussions that we have held with the Home Office — in which the Department of the Environment also participated — we found substantial scope for toughening up the model byelaw. It is hoped to put a revised draft of the byelaw to the local authority associations for comments very shortly, so that district councils will be in a position to adopt new byelaws in time for next year's harvest.
I am extremely conscious that tougher byelaws and a strengthened code of practice—measures to which I shall refer again in a moment—are only part of the solution. It is important at the same time to try and find other means of disposing of straw, and towards this end my Ministry has for some time been involved in a major research and development programme. Because straw is a bulky, low value material whose collection, transport and storage can involve substantial costs, the major part of the straw crop must be disposed of either on the farm where it is produced, or nearby. The core of our research into straw disposal is therefore aimed at ways of incorporating chopped straw into the soil to minimise deleterious effects on crops and cropping programmes. Studies are also being carried out to improve the feeding


value of straw for livestock. The use of straw as a fuel and in horticulture and for certain other uses is also being looked at.
Incorporating straw into the soil takes longer than burning and can thus result in a reduction in the area sown to winter cereals. On all but the lightest of soils it is likely to reduce the yields of the following winter cereals. It also requires more cultivations for satisfactory seed bed preparation, and this means much greater energy usage. As part of the programme of research into this method of straw disposal, a series of experiments is being conducted by the Agricultural Development and Advisory Service, the National Institute of Agricultural Engineering and the Agricultural and Food Research Council's Letcombe laboratory to examine the effect of incorporation at depths of between 5 and 20 cm. The examination covers different soil types, machinery and effects of sowing dates, and comparisons will be between straw chopped and incorporated, straw burnt in the field and straw baled and removed. Work is also under way to investigate the effect of straw incorporation on the availability of nitrogen to plants and possible methods of increasing the rate of straw decomposition in the field.
Research is also under way to seek to make straw more effective as an animal feedstuff. If straw is balanced with cereals and protein supplements it can take the place of hay in diets of many cattle. New techniques are being developed to improve the feed value of straw and research is being undertaken to investigate the effects of materials such as sodium hydroxide, ammonia, urea, sulphur dioxide and also straw-fermenting bacteria. Various feeding trials are being carried out with store cattle, dairy heifers, dairy cows and housed ewes. At present, however, the chemical upgrading of straw is on only a small scale, generally, because of the cost of the process and difficulties in using some of the chemicals.
My Department has supported an investigation by the Paper Industries Research Association into straw pulping processes, with a view to its use as paper or board. Straw is suitable, however, for only some types of paper making and packaging, and the total potential straw consumption for these purposes is estimated to be no more than about 650,000 tonnes.
In the longer term, use as a fuel could provide a substantial outlet for surplus straw, although at present this use is not economic on a large scale. If plenty of straw is available on a farm, it can be used for domestic heating purposes, and to dry grain and hay, at a cost which is likely to be competitive with oil. There is, however, the inconvenience of hand firing the farm boiler and disposing of the ashes. Off the farm, straw is not generally competitive with industrial coal and would present problems in relation to its bulk and the need for considerable capital investment. Research and experiments are taking place to produce a high density field press and to improve the use of straw burners and heat exchangers for crop drying. Improved methods of storing straw to keep it dry are being assessed. The National College of Agricultural Engineering is examining the potential of straw for use as an industrial fuel. The Department of Energy is examining the possibility of supporting some demonstration projects using straw as an industrial fuel.
Where appropriate, results from that research are incorporated in the advice which ADAS gives to farmers. In addition, my noble Friend, the Minister of State has

brought together a group of experienced individuals representing farming, scientific and industrial interests to discuss the development of alternative uses for surplus straw. In total, the Government are spending nearly £2 million on research into alternative means of disposing of straw. Despite that substantial effort, however, I cannot hold out the prospect that in the foreseeable future alternative uses will be found for more than a small proportion of the surplus.
A number of possible solutions have been proposed to the problems associated with straw burning, and I should like to deal briefly with those. Some have suggested a total ban on burning, possibly to take effect after a short interim period. It would not be responsible or practical to impose a ban on straw burning so long as there remains a substantial surplus of straw for which no alternative outlets are available. The result would inevitably he large quantities of unwanted, inflammable material left lying around the countryside, which could be a serious fire risk. Without the protection afforded by the byelaws and the code of practice, any malicious or, indeed, accidental fires caused in those circumstances would carry far greater risks to life, property and wildlife than would controlled fires under the arrangements I have outlined. The very real risk of that occurring is underlined sharply by information we have from the fire services of two counties where straw burning takes place—the only two for which we have data—where in both cases more than two thirds of the straw fires to which the fire services were called were believed to have been ignited not by the farmer but by children or vandals.
A further consequence that cannot be ignored is the harm a ban would do to the interests of cereal farmers, the vast majority of whom are responsible people who take every precaution when burning straw and stubble. In the absence of suitable alternative outlets, and so long as incorporation of the straw into the soil imposes significant difficulties, straw burning will remain an essential farm husbandry activity.
The problem of straw and stubble burning is not easy to tackle, and it does not lend itself to simple solutions. The Government are convinced that action must be taken to ensure that the risk of a repetition of this year's experience is minimised, and the most sensible and practical means of doing that is to strengthen the local authority byelaws and the National Farmers Union code of practice.
The amendments that we are considering are intended not only to provide additional safeguards to life, property and wildlife, but to reduce the risks of pollution by ash and smuts, which were the cause of so much concern this year. It may be possible, for example, to require a wider firebreak around the area burnt. Additional supervision by responsible staff would help to keep fires under control. Restrictions on the times when burning may be carried out — for example at weekends and on bank holidays — would minimise the disturbance to the public. Other possible measures being considered include limiting the maximum areas of straw that should be burned at any one time, further limiting the times when burning should be permitted, and measures that would prevent the spreading of smuts and ash.
The Government have already taken action to ensure that local authorities have adequate power to enforce proper practice through the courts. My right hon. Friend the Home Secretary is also likely to propose an order next


spring increasing maximum summary fines generally, so that local authorities making new byelaws next summer may be able to prescribe even higher maxima, perhaps up to £2,000.
These possible changes to the model byelaw will go a very long way towards minimising the risks associated with straw and stubble burning by compelling farmers—under threat of substantial penalties—to take suitable precautions before, during and after burning their straw.

The revised National Farmers Union code of practice will complement the strengthened byelaws and give additional guidance to farmers on sound and safe practices. These measures to make sure that such burning as is carried out is performed in a safe and considerate way are complemented by our research programme, the aim of which is to reduce the need for burning by developing viable alternative means of disposing of the surplus straw.

Question put and agreed to.

Adjourned accordingly at fifteen minutes past Two o'clock.